China’s economy is projected to expand by 5% in 2025, according to President Xi Jinping. This forecast aligns with official growth targets and seeks to quell concerns about the economic impact of Donald Trump’s incoming US administration. Xi’s annual address emphasized China’s resilience and stability, positioning the nation to navigate global uncertainties and domestic transformations.
Economic Stability and Stimulus Measures
In his speech, Xi described the economy as “overall stable and progressing,” citing steady employment and prices. His remarks followed a December Communist Party politburo meeting that signaled a decade-high commitment to economic stimulus, including subsidies and reduced borrowing costs.
“The current economic operation faces some new situations, challenges from the uncertainty of the external environment and pressure of transformation from old drivers of growth into new ones, but these can be overcome through hard work,” Xi said.
Since September 2024, stimulus measures have helped maintain growth above 4.8%, though Bloomberg analysts project a more modest 4.5% for 2025. Persistent accusations of data manipulation and post-pandemic consumer hesitation continue to cast doubt on official figures.
US-China Tensions Loom
Trump’s proposed high tariffs on Chinese imports, aimed at addressing alleged unfair subsidies, present a significant challenge for Beijing. China is expected to retaliate by imposing restrictions on US companies operating within its borders, including Elon Musk’s Tesla.
Xi also addressed the contentious issue of Taiwan, reaffirming Beijing’s stance on unification:
“No one can stop the historical trend of the reunification of the motherland.”
Taiwan, a vital producer of sophisticated computer chips, remains a focal point in US-China tensions. Since May, China has staged three rounds of military drills near the island, signaling its firm position.
Stimulating Domestic Growth
Amid these external pressures, China is implementing measures to strengthen its domestic economy. Recent initiatives include public sector pay increases, with civil servants receiving their first significant raises in years to boost morale and consumer spending. The central bank is also expected to ease borrowing conditions to support households and businesses recovering from a housing market slump.
Stock market performance improved modestly in 2024, following an unprecedented three-year decline, but policymakers aim for stronger growth to enhance wealth creation and private sector investment.
Strengthened Ties with Russia
Xi praised China’s strategic partnership with Russia, highlighting shared interests in countering US influence. Months after striking a “new era strategic partnership,” Xi and Vladimir Putin reaffirmed their commitment to cooperation on issues like Taiwan, Ukraine, and global diplomacy.
Xi is expected to visit Russia in 2025 to deepen bilateral ties further, according to Moscow’s ambassador to Beijing.
Challenges and Uncertainties
Despite Xi’s optimistic forecast, several hurdles remain. Persistent disinflation, a struggling housing market, and tensions with major trading partners could undermine growth. Skepticism over the accuracy of official economic data and the potential impact of US tariffs also weigh heavily on China’s economic prospects.
China’s projected 5% growth for 2025 underscores its determination to stabilize and advance amid global uncertainty. While Xi’s administration seeks to strengthen domestic drivers of growth and counter external threats, the coming year will test the resilience of the world’s second-largest economy in navigating a complex economic landscape.
