Beijing raises its debt to stimulate the domestic market
To keep growth at 5 per cent, Premier Li Qiang told the National People's Congress that the government would issue new treasury bonds to support consumer goods trade-in programmes. The deficit-to-GDP ratio rises to 4 per cent. In 2025, spending in education and scientific research will rise while defence spending is set to grow by 7.2 per cent. China’s response to Trump's new tariffs is for now limited to US agricultural products.
Beijing (AsiaNews/Agencies) – Premier Li Qiang today presented the government’s budget report at the inaugural session of the annual National People's Congress (NPC), the second of the Two Sessions currently underway in Beijing, the most important annual political event in the People's Republic of China.
In his address, the premier said that the government will support the Chinese economy by bringing the deficit-to-GDP ratio to 4 per cent, one percentage point more than the previous year, and by issuing “Ultra-long special treasury bonds totaling 300 billion yuan (US$ 41.3 billion) [. . .] to support consumer goods trade-in programs”.
The measures announced are a confirmation that, notwithstanding a 5 per cent growth target, the country is facing economic difficulties.
Beijing has had to deal for some time with rising youth unemployment and a slowdown in domestic demand, with the trade war with Washington picking up, as the US targets imports from China.
Li’s plans call for the creation of about 12 million new jobs in Chinese cities, while keeping inflation to 2 per cent. But Trump’s tariffs, which are already dragging down Asian stock markets, are a source of great concern in the Chinese capital.
“Internationally, changes unseen in a century are unfolding across the world at a faster pace,” reads the government’s working report presented to delegates to the National People's Congress.
“[U]nilateralism and protectionism are on the rise," it warns, noting that, “Domestically, the foundation for China’s sustained economic recovery and growth is not strong enough.”
Following the US tariff on Monday, China announced yesterday its own retaliatory measures against, saying that it “ready to fight to the end” over trade war.
China will impose tariffs of up to 15 per cent on a range of US agricultural products, including soybeans, pork and wheat, starting early next week.
Many analysts, however, consider it a relatively restrained response to Trump's all-encompassing tariffs.
As in previous years, the budget report to the NPC was also an opportunity to announce a new increase in defence spending, 7.2 per cent for 2025, raising concerns in the region over China’s military build-up over the years.
The defence budget is not alone in getting more money; investments are also increasing in education (+5 per cent) and scientific research and new technologies (+10 per cent).
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