Overview

• As widely expected, Premier Li unveiled an unchanged growth target for 2025 at March’s National People’s Congress – at “around 5%” – despite the persistent domestic economic challenges and the growing headwinds to trade. Subsequently, the State Council announced a 30-point plan of “special initiatives to boost consumption”. As announced, the plan is relatively light on detail – with statements around vigorously boosting consumption, promoting reasonable wage growth and generating effective demand through high-quality supply sounding similar to previous announcements over the years. One area which we see as potentially positive is increases to pensions and medical insurance for rural and retirees – as, if this is implemented at a sufficient level, it could reduce the need for households to save as a form of self-insurance. That said, until we see any of these policies actually implemented – particularly as much of the plan is allocated to financially constrained local governments to implement – our forecasts remain unchanged. We see China’s economy growing by 4.6% in 2025 and 4.2% in 2026.
• China’s industrial production increased by 5.9% yoy in January-February, with growth easing marginally from the 6.2% yoy increase in December. Since late 2024, industrial production growth has been trending around its pre-pandemic rates.
• Real fixed asset investment rose by 6.3% yoy in January-February (up from 4.5% yoy in December). In nominal terms, state-owned enterprises (SOEs) have continued to drive growth, while real estate remains a drag.
• China’s trade surplus pulled back from its seasonal peak in December – averaging US$85.3 billion a month across January-February (down from a record high of US$104.8 billion in December). By historical standards, the surplus across this period remains comparatively large.
• Real retail sales rose by 4.1% yoy over the first two months, up from 3.6% yoy in December. This represents a considerable improvement from the lows recorded during mid-2024, but remains weak when compared with the rates seen pre-pandemic.
• Following a sizeable contraction in 2024 (down by 9.4%), China’s new credit issuance saw a pickup in the first two months of 2025 – rising by 16.6% to total RMB 9.3 trillion. That said, bank lending remained weak, contracting by around 1.9%, while government bond issuance surged by 166% yoy.

For further details please see China’s economy at a glance (17 March 2025)