The Biggest Takeaway of China's 2025 NPC

Yahoo

05-03-2025

Chinese President Xi Jinping reads during a speech by Premier Li Qiang at the opening session of the National Peoples Congress, or NPC, at the Great Hall of the People in Beijing on March 5, 2025. Credit - Kevin Frayer—Getty Images
On Jan. 1, Quishi, the official ideological journal of the Chinese Communist Party (CCP), published a speech by President Xi Jinping. In it, China's strongest leader since Mao Zedong called for a period of protracted 'struggle' to maintain political security, achieve self-reliance, and demonstrate the superiority of 'Chinese-style' modernization over that touted in the West.
'History has repeatedly proven that striving for security through struggle brings genuine security,' Xi said, 'while seeking security through weakness and concession ultimately leads to insecurity.'
It sounded like a rallying cry in response to recent challenges, including record youth unemployment, deflationary pressures, stock market crash, burst housing bubble, and spiraling debt—not to mention the return to the White House of Donald Trump, who has made good on his election promise of the world's top economy hiking tariffs on the world's top exporting nation.
However, Xi's speech had actually been delivered at a CCP study session way back in February 2023. By finally publishing it in the party's flagship journal, the inference is that none of the intervening turmoil has made China's leadership alter course one iota.
'The last 23 months have been terrible for China's economy, terrible for households,' Jacob Gunter, a lead economy analyst at the Berlin-based Mercator Institute for China Studies, told a media briefing in late February. The fact that this speech was just published, adds Gunter, 'says a lot that this is the path, and we should not expect deviation from it.'
Which is another way of saying don't expect any big splashes as China's National People's Congress (NPC)—its annual rubberstamp parliament—kicks off on Wednesday. In opening the week-long meeting, Chinese Premier Li Qiang issued his annual Work Report, or fiscal health check, which repeated 2024's growth target of 'around 5%' for the coming year and revealed military spending will rise by 7.2%, which is also roughly the same.
'Achieving this year's targets will not be easy, and we must make arduous efforts to meet them,' Li cautioned an audience of 3,000 cadres crammed into Beijing's cavernous Great Hall of the People.
Of course, that nothing much will change was largely self-evident by the fact that this NPC follows on the heels of last July's third CCP plenum, where long-term goals were laid out: bolstering party-state capitalism, countering U.S. containment, boosting innovation, and entrenching loyalty to Xi. As the NPC is a state organ and thus downstream from the apex CCP, drastic course corrections ultimately fall outside its remit.
Still, the NPC's intransigence does underscore Beijing's ability to disregard short-term tribulations in favor of long-term goals. Even if, adds Gunter, 'continuity considering the economic downturn and the internal and external struggles that China is dealing with is actually quite remarkable.'
But while policy bombshells are unlikely to drop at the NPC, the flurry of speeches and reports will flesh out what we already know: Boosting consumption and expanding domestic demand are top of Beijing's policy agenda, as well as stabilising the beleaguered property market, attracting foreign investment, and promoting supply chain self-sufficiency.
As for U.S. tariffs, China today enjoys the benefit of experience from Trump's first term and is taking a more sanguine approach. On Tuesday, Trump added an additional 10% tariff on all Chinese imports on top of the initial 10% he imposed Feb. 4. In response, Beijing announced 15% tariffs on imports of American chicken, wheat, corn and cotton, as well as 10% on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products.
Read More: American Farmers Fear More Pain From Trump's Trade War
'The response from Beijing so far has been to go tit-for-tat but not really make a big issue out of it, probably with the expectation that getting into a big spat would exacerbate matters,' says Chong Ja Ian, an expert on Chinese politics and professor at the National University of Singapore.
How long that composure can continue is a big question. In Trump's speech before a joint session of Congress that began just minutes after Li's Work Report, the U.S. President doubled down on threats he would impose reciprocal tariffs on every nation from April 2. 'We've been ripped off for decades by nearly every country on earth, and that will not be allowed any longer,' he said.
As such, Xi's longstanding commitment to self-reliance is looking increasingly prescient. On Feb. 17, he welcomed some of the biggest names in China's technology sector for a highly choreographed meeting, where he urged them to 'show their talent' and contribute to China's growth. It marked an about-turn from Beijing's heavy-handed regulatory crackdown four years ago and reflects the CCP leadership's concern about a slowdown in growth amid American efforts to stymie China's access to transformative technology.
The meeting showed 'a recognition that the economy was not doing well,' says Steve Tsang, a professor at the University of London and director of its SOAS China Institute, 'and some high-profile gesture needs to be taken to show Xi is serious about getting the economy back on track.'
Indeed, efforts to achieve self-sufficiency—previously enshrined in controversial policies like Made in China 2025—appear to be paying dividends given recent headline-grabbing tech breakthroughs, such as drastically improved yield for Huawei's latest semiconductor chips and the buzz around China's generative AI platform DeepSeek, both of which contributed to a stock rally that added rally $4 trillion to markets in China and Hong Kong.
However, sustaining this bull market and improving China's economic prospects more broadly ultimately depend on boosting domestic consumption, which continues to lag. The issue, writes economist Michael Pettis, a nonresident senior fellow at Carnegie China, is whether weak spending is down simply to consumer confidence or engrained structural problems. 'While low confidence is certainly among the causes of China's economic malaise, much, if not most, of the causality may be structural,' he writes.
Li's Work Report talked a good game on attracting foreign investment, boosting food security, unleashing the creativity of 'future industries,' and plowing $100 billion into new infrastructure projects. Additionally, China will issue 1.3 trillion rmb ($180 billion) in ultra-long special treasury bonds, as well as 4.4 trillion yuan ($600 billion) in local government special-purpose bonds to offset the negative effects of falling tax revenues and depressed land sales.
But analysts doubt these measures directly nor adequately address the underlying reasons for lackluster consumption: public anxiety about future earnings amid a torpid economy and the falling values of real estate, which forms the principal store of household wealth.
'While they did deliver some increase in fiscal support, the degree of easing is more modest than it might appear,' writes Julian Evans-Pritchard, Head of China economics at Capital Economics, in a briefing note. 'We remain skeptical that it will be sufficient to prevent growth from slowing this year.'
As such, Xi's embrace of 'struggle' without adequate examination of hardship's cause may portend more pain ahead.
Write to Charlie Campbell at [e-mail].