A government document prepared for the annual meeting of the National People's Congress (NPC), China's rubber-stamp parliament, also showed China aims for a budget deficit of 4% of gross domestic product (GDP) in 2025, up from 3% in 2024.
COMMENTS:
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
"Growth, inflation and fiscal spend targets were all pretty much as expected. It doesn't look like China wants to go over-board with spending right away given the tariff threats as they potentially want to save ammunition for external threats later in the year. Inflation target at 2% looks aspirational as against the prior target of 'no more than 3%', which was targeted to control overheating.
"The shift signals a steady focus on reviving consumption and eliminating deflation risks, reinforcing the scope for stimulus. More details on AI spending plans would be needed to send a positive signal to markets."
LYNN SONG, CHIEF ECONOMIST FOR GREATER CHINA, ING, HONG KONG
"The majority of economic targets came in line with our expectations. Most importantly, this year's growth target was maintained at 'around 5%' again. As we've previously stated, the growth target is important as policymakers tend to attach high importance to accomplishing this goal, and China has a strong track record of completing the goal. We also tend to see the strength of fiscal and monetary support vary depending on how much is needed to reach the year's growth target.
"Repeating the 'around 5%' growth target despite a more challenging external environment is a show of confidence as well as an implication of stronger policy support for domestic demand this year.
"We think there is quite a high likelihood of policy rollout in the coming month or two. It will likely start with monetary policy as the implementation is easier and faster – we expect a rate cut and RRR cut in March or April."
TOMMY XIE, HEAD OF ASIA MACRO RESEARCH, OCBC, SINGAPORE
"In China's annual policy setting, the government set its 2025 GDP growth target at around 5% and raised its fiscal deficit target to 4%, as widely expected.
"A key shift came in the inflation target, which was lowered from 3% to 2% — a pragmatic adjustment in response to persistent low inflation and a policy shift from 'inflation prevention' to 'economic recovery.' The lower CPI target is likely to function more as an expectation-guiding tool, providing greater monetary policy flexibility. With inflationary pressures subdued, this adjustment could pave the way for further monetary easing, reinforcing expectations of stronger policy support."
ALEX LOO, FX AND MACRO STRATEGIST, TD SECURITIES, SINGAPORE
"Another year, another ambitious GDP growth target of 'around 5%', which seems like a tall task for policymakers given the domestic challenges and external trade headwinds. Official budget deficit was announced at 4% of GDP, which was also well-flagged since December last year by the MoF, hence little surprise there.
"Budget details were mostly in line with market expectations with China opting for a steady and incremental approach. As such, investors may opt to stay on the sidelines until more supportive policy initiatives are revealed in the coming weeks."
TIANCHEN XU, SENIOR ECONOMIST, ECONOMIST INTELLIGENCE UNIT, BEIJING
"I see a moderate boost to consumption.
"The doubling of consumer subsidies to 300 billion yuan is definitely good for retail sales of durable goods.
"Income boosts through pension gains and social security enhancements are likely to be modest, although the indication of disbursing childrearing subsidies is a bright spot."
HUANG XUEFENG, RESEARCH DIRECTOR, ANFANG PRIVATE FUND, SHANGHAI
"Early March macro drivers have materialised, with the work report meeting market expectations. This may imply the end of the stock market's spring rally since January, and investors are shifting back to fundamentals for directions. This development is favourable for the bond market, as we await February's official economic and financial data to confirm the weak reality."
DING LIANG, ECONOMIST AND STRATEGIST, MACRO HIVE, SHANGHAI
"Headline numbers for economic targets and fiscal spending are within market expectations. Boosting consumption and increasing investment efficiency now top the list of priorities, replacing last year's focus on developing high-quality productive forces, which has moved to the second place."
ZHANG ZHIWEI, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT, HONG KONG
"The report is broadly in line with market expectations. The growth target stays at 5%. The fiscal deficit target was raised to 4% as the government aims to boost domestic demand. There is room to revise up the fiscal deficit target later this year if the trade war leads to significant downside risks to economic growth.
"China lowered the inflation target to 2% this year from 3% last year. I don't think this is a significant change of policy stance, as the inflation target is indicative. It is not a hard target the government has to achieve.
"The report mentioned that the government will cut RRR and policy interest rate when the timing is right. This confirms the PBoC will continue to loosen the monetary policy stance."
LARRY HU, CHIEF CHINA ECONOMIST, MACQUARIE, HONG KONG
"These policy goals suggest that policymakers will use stimulus to offset tariffs.
"That said, March is too early for any major policy stimulus, as policymakers need more time to see the actual impact of the trade war 2.0. Their track record suggests that they can't miss the GDP growth target, but they also don't want to over-deliver. At this point, they will keep their cards close to the chest."
ANDREW XIA, CHIEF ECONOMIST, SHANGSHAN CAPITAL GROUP, HONG KONG
"The big difference is that the CPI target is set at 2%, compared with 3% in previous years. That, of course, is due to weak consumption.
"But it's not necessarily a bad thing. The government is pursuing what's called disinflationary boom. On one hand, lowering the target is pragmatic. On the other hand, it reflects a desire to drive economic boom while keeping prices at a low level.
"China now has a huge trade surplus. That means trade frictions will heighten. Further expanding trade surplus is no longer a good strategy, so we need to rely on internal demand for growth."
YUAN TAO, CHIEF ECONOMIST, ORIENTAL FUTURES, SHANGHAI
"There's really nothing that exceeds expectations.
"If you look at the deficit ratio and debt issuance plan, it's not that high.
"And, it's weird that we don't see a higher deficit ratio even with the ongoing trade war."
