China sets growth target of “around 5%” as it reels from Trump tariffs

China has set a goal of economic growth for this year of “around 5%” and has committed to pump billions of dollars in its economy in difficulty, which is now faced with a trade war with the United States.

Its leaders have unveiled the plan while thousands of delegates attend the national popular conference, a rubber parliament, which transmits decisions already taken behind closed doors.

But one week’s rally is closely monitored for indices on Beijing policy changes – and this year is more important than most.

President Xi Jinping had already fought against persistent consumption, a real estate crisis and unemployment, before the new 10% deduction from Donald Trump on Chinese imports comes into force on Tuesday.

This follows the 10% rate imposed in early February, bringing the total American levy to 20%. And it strikes what was a rare luminous point for the Chinese economy: exports.

Beijing retaliated almost immediately on Tuesday, as he did last month. He announced a reprisal action which included rates of 10% to 15% on certain agricultural imports from the United States. This is the key because China is the largest market in these goods, such as American corn, wheat and soy.

When this week’s meeting is opened, known as two sessions, China promised to make domestic demand the “main engine and the anchoring” of its economic growth.

Beijing has been able to achieve its 5% objective in the past two years, but growth has been motivated by strong exports, which has led to a record of record trade of almost billions of dollars.

Repeating this will be much more difficult this year.

“If the prices persist, Chinese exports to the United States could fall a quarter to a third,” said Harry Murphy Cruise, responsible for the Chinese economy at Moody’s Analytics.

Beijing will have to count more than ever on domestic spending to reach a growth of 5% – but it was one of its greatest challenges.

On Wednesday, Chinese Prime Minister Li Qiang said that consumption had been slow and undertook to “vigorously increase” household demand.

“At the national level, the basics of economic recovery and economic growth in China are not strong enough.”

“International, invisible changes in a century take place around the world at a faster rate,” said Li, while he noted the rise of protectionism in the world.

Beijing has already deployed projects to encourage its inhabitants to spend more, in particular by allowing them to exchange and replace consumer goods such as cooking devices, cars, phones and electronic devices.

The government now aims to invest more money in the pockets of the ordinary Chinese people and to reduce the country’s dependence on exports and investments.

Beijing plans include the emission of 1.3 Billion from Yuans (179 billion dollars; 140 billion pounds sterling) in special Treasury bonds this year to help finance its recovery measures. Local governments will also be allowed to increase the amount of money that they borrow from 4.4 Billions of Yuan, compared to 3.9 Billions of Yuan, according to the annual “work report”.

In a rare decision, Beijing has increased its budget deficit – the difference between government spending and income – a percentage of 4% of gross domestic product (GDP), the highest level for decades.

The hike signals Beijing’s commitment to increase spending to strengthen growth. He has long sought to maintain the deficit at 3% or below the GDP to demonstrate a budgetary discipline.

It also announced its intention to create more than 12 million jobs in cities, setting an urban unemployment target at around 5.5% for 2025. The figure was 5.1% last year.

The government is also committed to providing more support for high -tech industries, restoring stability in the real estate market and extending the care programs for the elderly for its aging population.

The question of whether these measures will be sufficient to increase consumption is the key question.

Severe restrictions from the pandemic era as well as prolonged real estate crisis and government repression against technological and financial companies have fueled pessimism among the Chinese. And a small net of social security means that savings have become particularly crucial in the event of unexpected expenses.

But China’s leadership is optimistic. CPCC spokesperson Liu Jieyi told journalists before the session that if the economy was faced with challenges such as low demand, it was “important to recognize that China’s economic fundamentals are stable, there are many advantages, resilience is strong and that the potential is important”.

The investment in what President Xi calls “high -quality development”, which covers high technology industries of renewable artificial intelligence (AI), should also be a major objective.

The second world economy, China has long made it possible to become a world leader in technology, in part to reduce its dependence on the West.

State media have already praised recent examples such as Deepseek and Unity Robotics, which both attracted world attention, as examples of “technological progress” of China.

Deepseek’s success in particular has experienced a Gathering of AI grant, analysts noting a renewed interest in China among foreign investors.

A comment in the Xinhua newspaper managed by the State said that “the new Chinese energy industries and the global green transition, driven by its advanced technologies, will continue to be significant growth engines”.

But the new American samples – which also come from the prices of Trump’s first mandate – could hinder these plans, especially because they could alleviate the feeling of investors.

“The chaos that the prices leave in their wake is kryptonite for investment,” explains Mr. Murphy Cruise. “The prices should offer a punch for two to the Chinese economy, landing the blows of both exports and investments.”

Also on Wednesday, China announced a 7.2% increase in its national defense budget, the same growth rate as last year.

Additional report by João da Silva