China | The main takeaways from March 2025 "two sessions"

Summary

The recently closed "two sessions" set the 2025 growth target at around 5% and raised the fiscal deficit budget to 4%, breaking the redline of 3%.

Key points

• Key points:
• The growth target signals the authorities’ strong determination to support growth amid Trump’s tariff war China-US relationship uncertainties. China will take advantage of the policy room to press ahead with a stimulus package to offset the impact of tariff war.
• Other economic targets are also announced, for instance, inflation target is set at 2% (lower than 3% previously) due to China’s deflationary environment.
• “Modestly loose” monetary policy stance to support growth.
• Fiscal deficit budget in 2025 surpassed the 3% red line to be set at 4%. Augmented fiscal deficit is expected to be 9%.
• To support technology advancement and domestic consumption to offset the tariff war impact will be the new concentration in 2025.

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