China has announced an annual economic growth target of “about 5 percent” for the year, prioritizing domestic demand as its primary economic driver amid escalating trade tensions with the United States, Al Jazeera reports.
Premier Li Qiang unveiled the target at the annual National People’s Congress (NPC) conclave on Wednesday, alongside measures to address challenges including youth unemployment, sluggish consumer demand, and a property sector debt crisis.
The plans include a rare increase in fiscal funding, allowing China’s budget deficit to reach 4 percent this year. The government aims to create approximately 12 million new jobs in urban areas and targets an inflation rate of 2 percent.
Premier Li highlighted the government’s commitment to making domestic demand the “main engine and anchor” of growth, acknowledging the need to address “inadequate domestic demand, particularly insufficient consumption.” To achieve this, analysts suggest Beijing is prepared to offer more support for local government spending, while potentially restricting access to overseas funds.
In what is described as an uncommon move, the fiscal deficit is being hiked by one percentage point, a decision analysts say provides Beijing with increased flexibility to tackle the ongoing economic slowdown.
Addressing the nearly 3,000 members of the NPC, Li acknowledged both international and domestic challenges during his 55-minute speech.
Furthermore, China announced a 7.2 percent increase in its defence budget in the draft budget, reflecting its commitment to rapidly modernizing its armed forces in the face of regional tensions and strategic competition with the US.
Since Xi Jinping assumed the presidency and commander-in-chief role over a decade ago, China’s defence budget has surged from 720 billion yuan in 2013 to 1.78 trillion yuan ($245 billion) this year.
Alongside the increased spending, the Chinese military is focused on enhancing combat readiness through rigorous training and drills, many of which reportedly involve Taiwan scenarios and territorial claims in the South China Sea.
Beijing considers Taiwan a part of its territory, although the island has maintained an independent government since 1949. President Xi has repeatedly stated his unwillingness to postpone unification indefinitely, suggesting the potential use of force if necessary.
Despite the significant increase, China remains the world’s second-largest military spender, trailing behind the United States, whose proposed military budget for 2025 is $850 billion.
