China pledges to boost domestic demand amid trade tensions with the US and declining exports.
China has set an annual growth target of around 5%, emphasizing its commitment to stimulating domestic demand as it faces increasing trade tensions with the United States, impacting its exports.
Premier Li Qiang, speaking at the annual Communist Party meeting, unveiled plans to potentially increase fiscal funding to reach a budget deficit of 4% this year. This move aims at addressing employment challenges among young individuals, revitalizing consumer demand, and tackling the property sector’s debt crisis.
Under these plans, approximately 12 million new jobs are expected to be created in urban areas, with Beijing also aiming for 2% inflation.
Al Jazeera’s Katrina Yu highlights the significance of the budget deficit increase, noting it’s the highest set in over three decades, signifying the government’s commitment to increased spending.
The Chinese government is determined to make domestic demand the “primary driver and anchor” of its growth, acknowledging the need to intensify efforts in addressing inadequate domestic demand, particularly the sluggish consumption sector.
In an unusual move, Li announced an increase in the fiscal deficit by one percentage point. This is seen by analysts as a step that offers more flexibility in addressing the country’s economic downturn.
In his address to the National People’s Congress, Li acknowledged both international and domestic challenges, highlighting an increasingly complex external environment impacting China’s trade, science, and technology sectors.
Domestically, Li noted weaknesses in China’s foundation for sustained economic recovery and growth, including weak effective demand and sluggish consumption.
Defense Budget Increased
In the draft budget, China announced a 7.2% increase in defense spending, reflecting its efforts to modernize the armed forces amid regional tensions and strategic competition with the US.
Since President Xi Jinping’s leadership, China’s defense budget has quadrupled, reaching 1.78 trillion yuan ($245 billion) this year. This funding is aimed at advancing military technology, enhancing missiles, submarines, and missile surveillance capabilities.
The Chinese military is focused on improving combat readiness through intensive training and drills, many of which are centered on Taiwan scenarios and territorial claims in the South China Sea.
Beijing considers Taiwan part of its territory, despite Taiwan having an independent government since 1949. President Xi has emphasized not delaying unification indefinitely, reserving the option of using force if needed.
Despite this, China remains the world’s second-largest military spender, trailing behind the US, whose proposed military budget for 2025 is $850 billion.
