China’s top leaders sought to project confidence in the country’s economy on Wednesday despite sluggish growth, an escalating trade war with the United States and growing geopolitical uncertainty caused by the Trump administration.
The government will aim to expand China’s economy by “around 5 percent” this year, said Premier Li Qiang, China’s highest-ranking official after Xi Jinping, at the opening of the annual session of the country’s rubber-stamp legislature.
Mr. Li acknowledged that the economy faced many challenges and that “arduous efforts” would be needed to meet the targets. But he struck a positive note about the country’s prospects, saying: “The underlying trend of long-term economic growth has not changed and will not change. The giant ship of China’s economy will continue to cleave the waves and sail steadily toward the future.”
The meeting in Beijing, called the National People’s Congress, is a tightly scripted political pageant that runs for several days, showcasing how Mr. Xi plans to lead China through what he has often described as “great changes unseen in a century” in the world.
Mr. Xi’s vision includes lifting China’s technological prowess and self-reliance and beefing up its military capabilities so it can dominate the Asia-Pacific region. It is focused on strengthening the ruling Communist Party’s grip on power by making national security a priority for all facets of Chinese society. Security was tight at the legislative session, which brings around 3,000 delegates to the Great Hall of the People, with police posted at several checkpoints near the venue.
Mr. Xi and his top officials have been trying to restore faith in the economy, which has struggled to regain momentum after being battered by the pandemic and a housing market crash that wiped out much of the wealth of many middle-class Chinese. But reaching that target of around 5 percent growth will be even harder than in previous years because of a trade war with the United States that shows few signs of abating.
Mr. Xi has held firm against Washington, signaling that China must be treated as an equal. He refused to bow to U.S. pressure like the leaders of Canada and Mexico did by engaging with Mr. Trump after the American president first called for 25 percent tariffs on their countries in January. China has instead responded with retaliatory trade measures, the latest of which were announced on Tuesday and targeted U.S. agricultural states that swung heavily for Mr. Trump in last year’s election. “We’re ready to fight till the end,” a foreign ministry spokesman said.
To help shore up growth, the government said it would raise its deficit to 4 percent of the overall economy’s output from an initial target of 3 percent last year. Such a significant policy shift signals China’s readiness to increase public borrowing, money that can be used to stimulate the economy.
But more than that, China needs households to start spending again to turn its fortunes around. Consumer confidence has been hit badly by the crisis in the housing market. In an acknowledgment of this, Beijing lowered its target for consumer prices inflation to 2 percent, its lowest level in more than two decades. Yet those who were looking to Wednesday’s announcements for signs of bolder solutions to help households, such as more health insurance and pensions for retirees, were left disappointed.
China has not missed a growth target since 2020, when its economy shrank because of the Covid pandemic, though economists overseas have long debated the veracity of the country’s economic data.
Under Mr. Xi, Beijing has emphasized the state sector’s dominance and rattled entrepreneurs with crackdowns on private firms. But in recent months, Chinese leaders, including Mr. Xi himself, have been more willing to acknowledge the importance of private companies in fueling economic growth.
Last month, Mr. Xi held a rare meeting with business leaders, including Jack Ma, the founder of the internet giant Alibaba, who had been sidelined for four years for criticizing Chinese regulators. Mr. Xi has also extolled technology as a leading driver of development and a means for China to become less vulnerable to pressure from the United States. (To that end, the government also said it would support development of advanced technologies such as artificial intelligence and autonomous driving, as well as that of renewable energy.)
Analysts say China is better prepared for Mr. Trump now than it was in his first term, showing a resolve to engage in tit-for-tat trade measures and increasing diplomatic engagement to counter U.S. pressure.
That was underscored on Tuesday when China announced that it would put tariffs of up to 15 percent on some U.S. agricultural products and impose punitive trade measures on 15 American companies, including the drone maker Skydio. It also added 10 other American companies to what it called an “unreliable entities list,” preventing them from doing business in China.
The moves were in response to the Trump administration’s imposition of an additional 10 percent tariff on Chinese goods on Tuesday. The administration has accused China of not doing enough to stem the flow of fentanyl and migrants into the United States.
“Beijing remains cautiously optimistic that it can make a truce with Trump so that the current trade war does not escalate into new and potentially far more costly domains,” said Jude Blanchette, director of the RAND China Research Center. “At the same time, Beijing will plow ahead with its quest for technological dominance and an economy that is resilient to pressure and coercion from the U.S., given how convinced it is of America’s unending hostility towards it.”
But the trade war is only one of the fronts in which China is confronting the second Trump presidency. It is also weighing its options as Mr. Trump imposes a dramatic reversal of American foreign policy, upending relations with historical U.S. allies like Canada, Mexico and Europe, and aligning himself with his country’s longtime rival Russia. China, in turn, has been courting Europe while also stepping up diplomatic exchanges with Russia, with Mr. Xi telling President Vladimir V. Putin in a call last week that China and Russia were “true friends.”
At the same time, Beijing signaled that economic doldrums would not slow the country’s military spending. China’s military outlays would rise 7.2 percent in 2025, reaching the equivalent of about $246 billion, according to a Ministry of Finance budget report issued at the meeting.
Last year, China’s military budget also grew by 7.2 percent. The country has had an unbroken record of annual increases in military spending for decades, usually a little over 7 percent in each of the past few years, even as economic growth has slowed.
China’s increases in military spending have funded a buildup of advanced missiles, fighter jets, naval ships and submarines, including forces focused on Taiwan, the democratically governed island that has resisted Beijing’s claims of sovereignty over it. Recently, China flexed its growing military reach by sending three warships to seas near Australia and New Zealand, where they practiced firing their artillery.
“An increase of 7 percent is itself quite a big number, because the base for it was already quite large,” said Lin Ying-yu, a professor who specializes in the Chinese military at Tamkang University in Taiwan. “What comes next, whether it’s new aircraft carriers or space technology and so on, will actually cost him quite a bit of the budget.”
Li You contributed research from Beijing while Amy Chang Chien contributed reporting from Taipei, Taiwan.