China’s People’s Congress: Beijing prescribes five percent economic growth

Against the background of the intensifying trade dispute with the USA, China’s leadership is helping the domestic economy. At the start of the Beijing People’s Congress, Prime Minister Li Qiang announced a growth destination of five percent for this year.

“When determining the growth rate at around five percent, we took into account the need to stabilize employment, prevent risks and improve people’s well -being,” said Li before the approximately 2,900 delegates in the large hall of the people.

Probably also with reference to the trade disputes with Washington, Li referred to an “increasingly complex and harder external environment”. Changes that the world has not seen in a century developed.

Problems brake economic output

The requirement of five percent economic growth corresponds to expectations, but is nevertheless considered ambitious. According to observers, China signals that it will take money in hand to support the economy. For German companies in China, the targeted growth is “good news,” said the executive board member of the German Chamber of Commerce in Northern China (AHK), Oliver Oehms.

A low domestic demand, weak consumption trust and the real estate crisis that has been smoldering for years are slowing down the economic engine. Deflation also presses on economic output. Unlike in the previous year, Beijing set up the inflation target by one percentage point lower – more realistic from an expert – “around two percent”.

And now with US President Donald Trump there is also new trouble in retail on Beijing. It was not until Tuesday, of all things the day before the People’s Congress, Trump ordered his special tariffs from February to Double Chinese imports from 10 to 20 percent. China reacted with new tariffs to US agricultural products and punitive measures against US companies. Ding Lieming, MP in the People’s Congress and head of a Pharma company, said China had to become more competitive to be independent. “We have to prepare for a hard fight,” he said to journalists in front of the plenary hall.

China wants to ensure confidence

The two largest economies in the world are thus on the threshold of a similar trade war as in Trump’s first term when both sides increasingly swim through tariffs and counter -tariffs.

Beijing also underlines with other measures presented at the People’s Congress that it wants to boost the economy and spread confidence among the population. The planned budget deficit of the government has been increased by one percentage point to four percent of gross domestic product and thus achieved the highest level in decades. The state relies on bonds in billions. 1.3 trillion Yuan (around 167 billion euros) are to be output as long -term special bonds. State banks are also to be equipped with capital via further special bonds of 500 billion Yuan.

Dark side of massive state funding

In his work report before the delegates, Li spoke of economic “difficulties and challenges” in the previous year, but also emphasized the success. China had made “great efforts” to promote an innovation -driven development and upgrade the industrial structure.

In China, the government plan “Made in China 2025” ends this year, which was adopted ten years ago. A whole series of ambitious guidelines to modernize the Chinese economy could be achieved: the country has become the world market leader in renewable energies and produces most electric cars worldwide. However, massive state funding in some industries also caused overcapacity and other problems.

Breakthrough in artificial intelligence

Most recently, the AI ​​company Deepseek caused a sensation worldwide, as its language model underlined that Chinese companies can keep up with the USA with artificial intelligence. The success of Deepseek has also created a better mood on the Chinese stock exchanges since the beginning of the year.

Tech shares that had lost value over the years, opened parts of their losses or even reached new highs. Just a few weeks ago, China’s state and party leader XI Jinping received the country’s important tech bosses in Beijing, which the markets rated as a further positive signal. The People’s Congress agreed to the tech companies.

Li: Increase financing of the “industries of the future”

LI also specifically responded to the topic before the People’s Congress. According to the work report submitted by the Prime Minister, the government plans to support the “extensive application of large-scale AI models”. In addition, a mechanism is planned to increase the financing for “the industries of the future”.

Jacob Gunter from the Institute for China Research Merics in Berlin saw signals of economic support before the People’s Congress to improve the mood among the population. However, it is more important to the party to promote a technological-industrial agenda and to modernize the military. In fact, Beijing was again strongly adding his military spending this year. As in the previous year, the military budget increased by 7.2 percent to around 1.78 trillion Yuan (around 231 billion euros).