Read the full transcript of a discussion on “China Sets 5% Growth Target: Confidence Amid Global Challenges” where news anchor of CGTN Liu Xin is the moderator. [March 5, 2025]
The biggest announcements? Around 5% GDP growth target for 2025, vigorously boosting consumption on all fronts, and promoting an AI-plus action plan. Why is China so confident about achieving similar levels of growth as last year, given the increasingly capricious external environment, namely America’s tariff war 2.0? How does China plan to achieve these targets, and how will all of this impact you?
Welcome to The Point with me, Liu Xin, coming to you from Beijing. I’m pleased to be joined from Singapore by Professor Bert Hofman, Adjunct Professor at the East Asian Institute of the National University of Singapore, also an Honorary Senior Fellow at Asia Society Policy Institute’s Centre for China Analysis. From Portland, Oregon, by Professor Liang Yan, Kremer Chair Professor of Economics at Willamette University. From Pretoria, capital of South Africa, by Gert-Johannes Grobler, a former Senior Diplomat of South Africa. And here in the studio, Rong Ying, Senior Research Fellow at the China Institute for International Studies. The warmest welcome to all my guests.
Key Economic Targets for 2025
First of all, here are some targets for economic and socioeconomic development China has set for itself for the year 2025. As I mentioned, GDP growth set at around 5%. Urban unemployment rate is set at around 5.5%. Some 12 million new urban jobs are expected to be created. CPI is expected to increase of around 2%. China, with 1.4 billion people to be fed, will try to produce over 7 million tonnes of crop. And energy consumption per unit of GDP is expected to drop by around 3% for the year.
These are some of the numbers that have been outlined in Chinese Premier Li Qiang’s Government Work Report for Deliberation. And now let’s take a listen to what he said about these targets.
[LI QIANG:] “The target of GDP growth of 5% fully takes into account the need to stabilise employment, prevent risks and improve people’s well-being, as well as the potential for growth and conditions supporting growth. So it underscores our resolve to meet difficulties head on and strive hard to deliver.”
Expert Analysis: Is the 5% Target Ambitious?
LIU XIN: I want to go to Professor Hofman in Singapore. How do you look at the announcement of the around 5% target? This is the same level as last year for 2024, as I said. Why has China decided to set the target as the same this year?
[BERT HOFMAN:] So first, I do believe this is an ambitious target given the external environment that you already mentioned. But second, I think it’s deliberately ambitious because the growth target drives people’s expectations. It drives investors to think about 5% growth rather than 3% growth. And third, there is quite a bit of spillover of growth from last year. In the final quarter of last year, the government took a whole range of measures that stimulated growth. That’s why the last quarter of 2024 came out quite alright. And that spills over to some extent in this year. At the same time, we have to recognise that the external environment is deteriorating rapidly. And that’s not just because of the tariffs, but it is also the policy uncertainty being created, the trade policy uncertainty that by itself already suppresses investments around the world. And everybody starts to become more careful. And that’s not good for the world economy and it won’t be good for China.
[LIU XIN:] Professor Liang, how do you look at it? How ambitious or how pragmatic? Because when China sets a certain number, which is keenly anticipated by people all over the world, it better meet it. It better make sure that it can meet it by the end of the year.
[LIANG YAN:] Well, I agree with Professor Hofman. I think this is an ambitious goal, but it’s not unrealistic goal. I think, first of all, this goal was set, first of all, by the local government, their own targets. And then at the national level, this is the weighted average of the local targets. And I agree. On the one hand, this target is helpful to guide the market expectations. But on the other hand, I think this target is also very instrumental in guiding policy actions. And I think that it’s very important.
And I think that even though external environment has become more precarious and uncertain still, I think the driving force should come primarily from domestic demand. And that’s why I think the government has put the top priority of the government’s tasks in 2025 as bolstering domestic consumption demand and improving investment returns. So I think, yes, the goal is ambitious because it’s necessary, as the premier talked about, to produce enough jobs to improve living standards and to really achieve the goal by 2035, double the GDP than the 2020 level. So the 5 percent is realistical based on the current, I think, both in the local government’s targets, but also on the, I think, the room for certain policies to help to achieve the goal.
Setting and Achieving Growth Targets
[LIU XIN:] Mr. Rong, how exactly does China set its GDP target at the beginning of the year? How does it know that it’s going to, you know, a certain amount is going to happen? For instance, last year, we set the target at around 5 percent at the end of the year.
It managed to achieve 5 percent growth. How did China manage that?
[RONG YING:] It is true. I think the around 5 percent target this year is different, quite different from the one last year. If last year when we talk about 5 percent, around 5 percent, we’re more looking at over, I mean, 5. But after last year, the year 2024, the difficulties, the challenges facing us and looking ahead, the more complicated problems, challenges we are facing, not only China, the world at large. It is, I think, understandable for people to ask question, is it too ambitious?
But I said, as I want to say, as I listened very carefully Premier Li Jiang’s statement, it is not a political statement, it is rather a very practical sort of target that based on serious commitment and also it’s sent out not only to the people in China, the Chinese people, but also the world at large that China, given the size of economy, and China is ready to overcome unprecedented difficulties and the challenges to send out a message, positive message, a message of stability to overcome these difficulties, to ensure the world will remain, economic and social development will remain positive and China want to do its job.
Global Challenges and Trade Tensions
[LIU XIN:] Mr Grobler, I trust that you were following the government report on your end as well. One of the sentences that stayed on my mind is when Premier Li Jiang pronounced that China will overcome whatever difficulties that may come. It was a short statement, but it’s a very resolute and, you know, the determination that China will manage to achieve its goal is rather clear. But as we mentioned, just a day before the National People’s Congress convened, the United States imposed, or it came into effect, an additional 10% tariff on Chinese imports. This follows an initial 10% imposed in early February. That will take the total to 20% of US tariffs, additional tariffs on Chinese imports. Why is China not worried that given this kind of tariff measures, unilateral measures, it’s still able to achieve 5%, around 5% for 2025?
[GERT JOHANNES GROBLER:] Thank you. China has gone through a number of economic challenges over the last year or two. If one looks at the, for instance, foreign direct investment that came into China last year, it was lower than the year before. So there were a number of economic challenges, partly domestic, instigated, or internationally. Now, throughout, China’s economy has been resilient. It has really been resilient. But what is happening now, with the focus on demand, the focus on consumption, the focus on the private sector, all those issues, all go well for the economy of China. I think it’s a realistic and achievable goal to go for 5%.
The last point that I want to make is that the tariffs, China has responded to that and continue to retaliate if necessary. But these tariffs could unfortunately strain supply channels, and I said to my American friends that it will add costs, and the US consumers will probably pay for this. And the unfortunate thing is that it’s also now complicating the diplomatic process between the US and China, which is so necessary to get back on track.
Well, China is definitely focused on doing the right thing for its economy. At the end of the day, China’s
LIU XIN: trade with the United States is only a rather small proportion of its GDP growth. Rather we’re hearing a very big continuous emphasis on vigorously boosting consumption, growth, investment efficiency, and expand domestic demand on all fronts. Professor Hoffman, help us understand what information is packed into these three phrases.
BERT HOFMAN: All right, well first I agree with you that trade has become less important for China. Trade with the United States has become less important for China. China like any country that becomes richer is becoming increasingly a domestic economy. So that’s why domestic demand is more and more important. On domestic demand, of course, there’s the consumption demand from the households and the consumers, and then there is also investment, which is also domestic demand. Now on the consumption side, China has been struggling for quite some time to get up the ratio of consumption to GDP. It lags most other countries, it lags even high middle-income countries, and I think there is a number of measures in the presentation of the plans now that would tip the balance a little bit in the direction of more household demand, i.e. a bit of a better social security net, some higher pensions, some payments for students, etc. But what is more important maybe is government consumption, because government consumes also by a form of health care, by a form of education spending, and that is more feasible for government policy. Government policy has an instrument there, and that could be the main driver for consumption this year. Second, we still have investment, and even government investment, even though…
LIU XIN: But it seems that, sorry for interrupting Mr. Ho, it seems that you are putting more emphasis on government spending, government consumption, instead of consumer, instead of the general public. Why are you not so optimistic on the prospect of the close?
BERT HOFMAN: Yes, there is a couple of reasons. In the short term, the property sector is not doing well, property prices are not doing well, that really influences household expectations, because they rely a lot on property and the sale of property for their pension or for their income, that does not look very good. In the longer term, what you need is two things to get household consumption up. One is households getting a larger share of the pie, i.e. from national income, and two, households saving less than they do. China’s household savings are very high, more than 30% of disposable income is exceptionally high in the world. That’s in part because of the uncertainties that China faces, because of the way, say, household care is financed, the way social security is financed, the way housing is financed, that leads to a very high savings rate. So if you want more household consumption, you need to change these things, in order to have households save less. That can happen, and also the share of income can happen, it can grow over time, but it will take time. In the short term, government consumption is a bigger lever.
LIU XIN: It’s interesting, however, if you listen to the government work report, and if you listen to the experts analysing the government work report on the national television, they actually tell it in very… explicit terms. For instance, they have to solve the problem of when people have the money they can’t buy the kind of quality products they need and when they buy, their experience is not very good. So there will be special action plans, special initiatives to boost consumers so that people have more money, as you mentioned, to consume and greater will to consume. Professor Liang, do you think that policymakers have their hands on the impulses and doing the right and writing the right prescriptions?
LIANG YAN: Well, I think it takes a holistic approach to so-called stimulate consumption. We know that consumption is largely dependent on income and also the propensity to consume. And so making a good consumption environment and provide quality products and services for people, I think that is definitely important in a way to stimulate consumption. But I also wanted to point out that if you look at the long term structural factors, China’s consumption is actually growing at about average rate of 8 percent per year from 2000 to 2023. It’s not until, you know, when we had this Covid that people start to really increase the precautionary savings and they’re not feel confident to spend on top of these real estate market slump. So I think in a way, the government spending, as Professor Hoffman rightly point out, is very important in not only directly supporting consumption, talking about the trading programs, but also it’s important to drive GDP growth, create jobs, create income, provide some income supplements to people so that they feel more confident to spend. And also when it comes to, you know, the confidence, I think the government spending helps to stabilize the housing market. I know we probably would talk about, you know, these government long duration bonds and special bonds at the local government level to stabilize the property market. So all of this will boost consumer income, their confidence, and then now foster a good environment for consumers to consume. I think all of this will be tremendously helpful.
I just want to provide one last very personal sort of note. My father is in China. He wanted to travel in some places around, but he told me because of his age, some of the travel groups did not want to take him. So I think this is very important to develop the super economy, the tourism industry, the service industries, to really seize that market opportunity, but also really to foster the kind of healthy consumption environment for people who actually have the money and have the time and want to consume.
LIU XIN: Well, China is in such a transitional period of time, right? The population of senior citizens is increasing larger and there is a lot of need for quality product and services to cater to this kind of changing demographics. And yet it seems at this moment, the experience and the availability is not there. Professor Rong, is there something you want to add here? Is there something that you think needs to be pointed out when it comes to boosting consumption? Is China having the right dialogue at least?
RONG YING: Yeah, that’s a great question. I think certainly we can understand and we can feel as a Chinese that at this age, I can very much feel that there is a transition in terms of domestic consumption. I mean, Chinese, every Chinese, from not dare or want to consume, because China culturally also economically did not want to spend overspending, while now I think the question is indeed that we want to spend money, but how? And we want to have that kind of quality. And that’s exactly, I think, the government report or the government would like to address in a comprehensive, all-round way. On the one hand, we need policies, steps to take to continuously boost the confidence to address the root causes that hinder the house consumption by addressing…
LIU XIN: What does China say is the root cause, the number one?
RONG YING: Well, there are quite a lot, as all the previous speakers mentioned.
LIU XIN: But the biggest one?
RONG YING: The biggest one that, of course, like the social security issue, talking about the older generation, my generation, who are able to spend. But the younger generation, possibly they are more looking at, because they’re more confident. Confidence is certainly a good job and the quality is very much, I think, important.
New Quality Productive Forces
LIU XIN: Well, you mentioned this word confidence, which is really very important. And that is also, I think, being highlighted by the government work report and by the kind of policies that will be rolled out. Let’s talk about a very important aspect, which is while China’s economy transitioned from one emphasising on quantity to one emphasising on quality. And this phrase, Professor Hoffman, I want you to comment on that. This phrase is developing new quality product forces according to local conditions and accelerate the building of a modern industrial system, especially talking about promoting AI plus action plan. How significant is that in boosting consumption in, you know, achieving the around 5% GDP growth?
BERT HOFMAN: Well, the new quality productive forces is a way of expressing a focus on the future, i.e. making sure that China will be fully engaged in industries that are only emerging now based on new technologies. I think that’s a very sound thought and government policy is driven by that. The localisation of that concept, I think we are yet to learn exactly what it means, but I can see that for different provinces and different localities, of course, their cutting edge technologies are different from, say, the Shanghai’s and the Beijing’s of the world, whereas Beijing and Shanghai, they’re world competitive. In other provinces, there may be
PROF. BERT HOFMAN: …a bit more behind. So for them, the new quality productive forces are different than they are from the Shanghai’s and the Beijing’s of the world. AI, of course, is one of these new quality productive forces. We all talk about it and we are getting very excited about it. But the impact on production is really yet to come and the impact on productivity is really yet to come. So having programmes to make sure that AI, first of all, is safe, but second, can be used by a wide part of the population, will in the end increase productivity and hopefully will also increase employability of people and productivity of people so that their wages go up. So that is the link in my view. But I think it’s early days. I haven’t seen the plan yet. So I can’t really judge that. But there is really a big emphasis.
LIU XIN: Professor Liang, China has said it will integrate artificial intelligence technology with the manufacturing market, knowing China has the world’s largest manufacturing power. And China has a huge market where application of any new technology is extremely advantageous. How do you look at the prospect and implication of China promoting the AI plus action plan on the rest of the world?
PROF. LIANG YAN: Well, I think, first of all, it’s very critical for China to foster the new quality productive forces, right? Because China now is in the middle country rank and to be able to grow out of that, China needs the productivity driven growth. And there has been a lot of concerns that China’s growth has been really dependent on investment inputs and labour input. So now it’s time to boost the total factor of productivity. What that means is that not only do you need to have these emerging technologies, but also you need to integrate, you know, the AI technologies, quantum computing and others into the traditional industries like manufacturing, like services. And so I think this is really the AI plus plan to not only just promote the AI technologies, but really how it integrates into industrial robotics, into advanced manufacturing, into health care, education and so on and so forth. And I think in terms of localisation, I think this is important because we know in China, these local economies on the one hand are very competitive, which is good. They promote their own local businesses. On the other hand, there could be a lot of duplications and waste of resources. So this idea that each cities and each localities should develop their own advantages and their own competitive industries. So I think this is a very important sort of a plan going forward.
Global Implications and Africa-China Relations
LIU XIN: OK, Mr. Grobler in South Africa, what are you watching out for in terms of China spearing ahead in terms of developing new quality, productive forces? What’s the implication for other developing countries that are trying to foster growth?
GERT JOHANNES GROBLER: No, this two sessions, as we all know, is followed very closely by the international community because of its implications, economic and those others. And Africa particularly would like to see greater or first of all, greater demand in China, but access, greater access to their products. And this is being discussed in their focus context. So the general feeling on China-Africa relations in the last few weeks, given the international developments we’ve seen elsewhere, one can almost say that there seems to be a sense of gravitating economically towards China. And I think what is going to come out of this two sessions with all the measures, all the stimulus that is going to come out of this, it will be welcomed in Africa. And I actually see that the trade relations between the two are going to continue to grow.
The other point I just wanted to make in regard to the previous question is, I said the economy was fairly resilient, it was a more than a 4% growth. Very few countries in the world achieved that. Now 5%. And the factors like, which is very encouraging, is like the opening up, the reform that we read about, which we would like to see the final outcome. There’s the issue of the private sector, a boost of the private sector. Those are all very important issues in taking your economy forward. And I have no doubt that China is well positioned to continue to grow.
LIU XIN: We can tell people that this was one of the emphases that was discussed on national television. Actually, on February the 17th, Chinese President Xi spoke at a symposium on private enterprises, and a law is also being promulgated to promote private sector development. Finally, Mr. Rong, coming back to the impact of new technology on employment, the other day I was talking to consumer service of a white good factory, and I was answered by an AI. I guess that’s going to be the trend going forward in the future. How is China embracing the impact of new technology potentially on employment? What is to be taken away by other countries in this aspect?
RONG YING: Indeed, I think if we look at the development that we have seen in the past few months, just a few months before and after the Chinese traditional spring festival, the deep sea and other related developments and initiatives, now we are going to see, and we have seen that by the government work report. I think it gives us the reason why China is confident about its development strategy, the 5% growth rate and others, because at least at the AI-related development, the high new quality product forces issues, China has not only fulfilled its goals, but I think over fulfilled and has been stay ahead the trend or stay ahead the curve. That gives the confidence. Of course, there are other issues related to that. I mean, the other side effects that were addressed, I mean, employment and others, but I think as we look at the report in a more holistic way, we all can have an answer. To be sure, the report also highlighted the challenges and there is no shortage of it, but it highlighted for the Chinese people and for people around the world, the challenges that the Chinese economy are faced with. I encourage people to read it. If you have the opportunity, it will be made public in English as well.
Conclusion
LIU XIN: Many thanks to my guest, Professor Bert Hoffman, Professor Liang Ye, Mr. Grobler from South Africa and Mr. Rongying here in the studio. With that, we come to the end of this special edition of The Point with me, Liu Xinyi. As always, you can follow me on Facebook and act using the handle Xinyi in Beijing on behalf of the whole team. Thank you for joining us.
