China's Two Sessions: 5% GDP growth target, defence spending & talking tough on trade

China is holding its Two Sessions gathering in Beijing from Mar. 4 to Mar. 11, bringing together the National People's Congress (NPC) and the Chinese People's Consultative Conference (CPPCC).

The gathering is the most significant and public event in China's political calendar and is usually a time for policy pronouncements and personnel changes.

For instance, in 2023, China's President Xi Jinping was unanimously elected to a third term, the first for a leader of China since Mao Zedong.

Upheaval

The 2025 gathering takes place amongst international upheaval, as the United States, in the early days of President Donald Trump's second term, appears to step back from the global leadership role it once held.

Trump has threatened friends and competitors alike with trade tariffs, notably grouping China with neighbours Canada and Mexico as his opening tariff targets.

While the two North American nations have seen Trump go back and forth, he has stuck with the tariffs targeting China and recently increased them to almost 20 per cent on some imports, prompting China to retaliate by putting tariffs of 10 to 15 per cent on farm goods and other U.S. exports.

Stimulus

Against this backdrop, China's Premier Li Qiang delivered his speech to the gathered NPC, China's top legislative body.

Speculation had been rife that China would announce a significant stimulus package in order to boost its economy in the face of U.S. tariffs.

Nikkei reports that China had set its 2025 Gross Domestic Product growth target at around 5 per cent, similar to the growth it had achieved in 2024.

China's budget deficit target would increase from 3 per cent to 4 per cent of GDP, and the amount of government and local government bonds being issued would also increase.

One of China's main priorities is to stimulate domestic demand, described by Nikkei as 'sluggish', in response to U.S. tariffs, with Li saying that "vigorously boosting consumption will be prioritised this year".

Analysts that Nikkei spoke to indicated that there were no significant surprises and that China was moving cautiously and boosting domestic demand in the face of uncertainty caused by U.S. tariffs.

Single digit growth

The Associated Press reported that China would increase its defence budget by 7.2 per cent in 2025.

The Global Times celebrated this as "10 years of single-digit growth" in military spending.

China's defence budget remains at under 1.5 per cent of GDP, something that GT characterised as a "restrained figure" despite ongoing efforts to modernise its military.

GT's hyping of China's military capabilities, lauding new developments such as its fighter jet prototypes, came in contrast to its berating of the U.S. for its own large defence spending, which it claimed was three times that of China.

It also took the opportunity to highlight China's military concerns, such as China's claims in the South China Sea, where GT accused the Philippines of provocative actions, as well as the "secessionist forces" of Taiwan".

Law of the jungle

Also taking place around the Two Sessions, China's foreign minister Wang Yi held a press conference on Mar. 7, speaking about China's role in the world.

Reuters reports that Wang was asked about U.S.-China relations, and he replied by saying that no country could suppress China on the one hand while also trying to develop good relations with it on the other.

Wang said such an approach was "two-faced" and not helpful to stable ties, but he took special care not to name the Trump administration directly.

Reuters described Wang's remarks as subdued and suggested that he was trying to keep hopes of future trade talks alive.

This was in contrast to belligerent comments made on Mar. 5 by China's U.S. Embassy's Twitter account.

It responded to news of new trade tariffs on Mar. 5 by posting, "That if war is what the U.S. wants, be it tariff war, a trade war, or any other type of war, we are ready to fight to the end."

Wang painted a picture of China as a reliable global partner.

He warned that "if every country emphasises its own national priorities and believes in strength and status, the world will regress to the law of the jungle".

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Top image via Xinhua & Wikipedia