China’s 2025 Economic Plan: Growth, Policy Shifts, and Innovation

In the opening session of the 2025 National People’s Congress (NPC), Premier Li Keqiang outlined China’s economic goals for the year, reflecting on the past year’s challenges and setting a growth target of around 5%. Despite external uncertainties, including new tariffs from the U.S., the government aims to boost domestic demand and project confidence. Optimism around sectors like AI and consumer spending suggests potential for economic growth if confidence improves.

China's 2025 Economic Plan: Innovation, Growth, and Strategic Support

Fiscal and Monetary Measures

China will adopt a proactive fiscal policy, with a budget deficit target of 4% of GDP and the issuance of RMB 1.8 trillion in special treasury bonds. Local governments will receive RMB 4.4 trillion in bonds for key investments. A moderately loose monetary policy will focus on liquidity support for the housing and equity markets, alongside efforts to stabilise the RMB exchange rate.

Boosting Domestic Consumption

To counter external pressures, China is focusing on increasing domestic consumption through trade-in programs for durable goods, subsidies for services like childcare, and the expansion of free preschool education. Reforms will also improve urbanisation for migrant workers, granting them better access to public services.

Supporting the Private Sector

Reviving confidence in privately owned enterprises (POEs) is a key priority, with legal protections and financial incentives. The government plans to enhance credit access for SMEs and support tech sector growth through long-term loans and investment in R&D.

Emphasising Innovation and Technology

China is doubling down on innovation, particularly in AI, quantum computing, and 6G, as part of a broader push to expand the digital economy. Government investments will drive research and development, supporting industries of the future and technological advancements across various sectors.

Opening Up to Foreign Investment

China will continue to promote foreign direct investment (FDI) by easing restrictions, especially in sectors like telecommunications, education, and healthcare. Expanding free trade zones will offer more flexibility and autonomy in reform efforts, signalling greater openness.

Stabilising the Housing Market

While local governments will manage housing policies, more than RMB 6 trillion has been approved for real estate financing. However, the recovery remains uneven, and the central government may need to step in with broader measures to stabilise the market.

Conclusion

China’s 2025 economic plan combines fiscal and monetary strategies, innovation, and a focus on boosting domestic consumption and the private sector. By emphasising these priorities, the government hopes to navigate external challenges and foster sustainable economic growth.