Beijing has just concluded its annual Two Sessions, the concurrent meetings of China’s legislature, the National People’s Congress (NPC), and its political advisory body, the Chinese People’s Political Consultative Conference (CPPCC). Highlights included Premier Li Qiang’s Government Work Report (GWR) to the NPC on March 5 as well as several events where President Xi Jinping met with NPC and CPPCC delegates. The sessions revealed the government’s economic targets and policy priorities for 2025.

Below, experts from the Center for China Analysis share their views on the key takeaways from the Two Sessions. Last week, CCA also hosted a webinar on the GWR with Neil Thomas, Lizzi C. Lee, Michael Hirson, and Guoguang Wu.

By Neil Thomas

This year’s Two Sessions broadly met the expectations outlined in a preview article I co-authored with my colleague Jing Qian in late February. Li Qiang announced an unchanged economic growth target of “around 5%,” a record-high fiscal deficit target of 4% of GDP, a reduced consumer price inflation target of 2%, and stable targets for creating over 12 million new urban jobs and keeping urban unemployment at around 5.5%. Given falling property prices, weak consumer sentiment, strained local finances, and rising geopolitical volatility, these targets are relatively ambitious.

Despite the pro-growth messaging, we overestimated promises of stimulus. Beyond an extra 1.6 trillion yuan in deficit spending, Beijing will issue 4.4 trillion yuan in local government special-purpose bonds for investment in infrastructure, purchases of idle land and unsold housing, and payments of arrears to government contractors. A 1.3-trillion-yuan issuance of ultralong special treasury bonds will fund projects that advance national security and other interests. Beijing will also issue 500 billion yuan in special sovereign bonds to recapitalize state-owned banks.

All the same, these unprecedented stimulus measures and bond issuances are unlikely to achieve 5% growth, especially given Beijing’s reliance on exports and the potential for further U.S. tariffs, sanctions, and export controls (in addition to the 20% tariff increase since January). Xi Jinping seems open to a deal with U.S. President Donald Trump but is keeping his powder dry in case of further U.S. escalation. The more intense the trade war, the more aggressively Beijing will add stimulus. Nonetheless, debt concerns will likely deter a stimulus “bazooka,” and direct consumer stimulus remains unlikely due to ideological opposition and implementation hurdles.

Beijing also made only modest pledges to boost consumption and reduce overcapacity. Li announced that Beijing will accelerate consumption tax reforms to pass revenue onto local governments; free up disposable income through improved subsidies for childcare, healthcare, and pensions; and allocate 300 billion yuan of the ultralong special treasury bonds to expand a consumer goods trade-in program. These policies suggest that creating a consumer-driven economy remains a long-term, incremental project. Strengthening domestic consumption would reduce China’s reliance on what it sees as an increasingly unreliable West. Still, in the meantime, Beijing is more focused on investing in the innovation needed to indigenize high-tech supply chains and reduce dependence on the West.

The Two Sessions showed that Beijing wants to bolster business and consumer confidence to consolidate China’s long post-COVID economic recovery. Despite Xi’s authoritarian, statist, and nationalist preferences — all of which continue to influence policymaking — he is pragmatic enough to realize the need to preserve at least a baseline level of development. Xi knows that without economic growth, he cannot achieve his dream of China’s “national rejuvenation.”

By Lizzi C. Lee

This year’s Two Sessions made clear that Beijing is not reversing course on private enterprise, but it is recalibrating state-private relations. Li Qiang’s GWR made all the expected promises — supporting entrepreneurs, curbing arbitrary crackdowns, and clearing overdue payments to private firms — but the strongest signal came from Xi Jinping himself, who elevated last month’s private enterprise symposium by codifying its “spirit” (jingshen) within Chinese Communist Party (CCP) discourse as a directive to study and implement at every level.

Beijing realizes how much it needs private innovation, though the realization did not come easily. The shock came with DeepSeek — not just a milestone for Chinese AI but a game-changer for China’s capital markets — lifting asset prices and jolting market sentiment overnight. That wake-up call made it clear that private firms are indispensable, especially against the backdrop of U.S.-China tech competition. The propaganda machine is now in overdrive, repackaging Xi’s past statements on economic policy as proof that he has always backed private enterprise and framing DeepSeek as a natural extension of his vision.

Beyond messaging to the private sector, the real shift this year is in Beijing’s philosophy on macroeconomic policy management. Stabilizing market expectations, business sentiment, and asset prices is now an explicit policy priority. Since COVID-19, Beijing’s preferred approach to economic recovery has been gradualist rather than relying on short-term stimulus to drive growth.

Those days are over. Li’s GWR calls for preemptive, decisive action, acknowledging what market participants have long known — that psychology drives economic behavior. A major sentiment boost is required to shake the system out of its multiyear sluggish recovery. The tongue-in-cheek phrase among stock traders, “three bullish candlestick charts can change beliefs” (san gen yang xian gaibian xinyang), actually made it into a Two Sessions press briefing. This was an unusually direct admission that stock performance and asset prices are not just outcomes; for the first time, they are part of the policy toolkit.

It is no surprise, then, that Beijing is going all in on technology. What is interesting is how. Local governments are embracing tournament-style competition, vying for national recognition as local high-tech champions. Provinces are no longer just competing over GDP numbers. Now they are increasingly scrambling to build AI clusters, robotics hubs, and biotechnology centers to prove their worth. But while Beijing is letting provinces compete, it is tightening central coordination as part of its "whole-nation approach.” Xi delivered a strong message on deepening cross-regional integration to establish a more cohesive, nationally coordinated STEM talent pipeline, industrial base, and unified market. Li’s stress on “enhancing the overall efficiency of the national innovation system” signals a deliberate shift — China is not just throwing money at high-tech; it is orchestrating it for maximum efficiency.

However, execution will be the real test. Amid the contradictory challenges of Xi’s push for increased centralization, local competition, and the revival of private sector dynamism, Xi’s emphasis on bureaucrats following through on central directives underscores a deeper reality: local officials have been dragging their feet or, in some cases, acting in opposition to them. Li’s vow to stop “far-seas fishing” — a term referring to local authorities aggressively pursuing private entrepreneurs across jurisdictions to extract fines and settlements — signals frustration with predatory practices that go against central mandates. A key watchpoint is whether legislation to promote the private economy gains real traction — and, more broadly, whether local governments can meaningfully tackle their debt woes, given that much of the predatory enforcement stifling the private sector was driven by their scramble for revenue.

No matter how strong the central directives, what matters is whether local officials implement them and whether private firms and foreign investors believe this time will be different. If they do not buy in, all the recalibration in the world will not make a difference. 

By Lyle Morris

Li Qiang’s GWR featured most of the same themes on national security and foreign policy as last year’s report. In fact, the language in the sections on foreign policy and military modernization is so similar that observers might experience déjà vu. This is not unexpected, given that the report is not usually the venue for major foreign policy announcements. But a few key phrases on the international environment, national defense, and Taiwan in this year’s GWR merit highlighting.

First, and perhaps most noteworthy, was Li’s dire assessment of the global security landscape. He began with “changes unseen in a century are unfolding across the world at a faster pace,” a phrase frequently used during Xi Jinping’s meetings with his Russian counterpart, Vladimir Putin. Li further judges that China faces “an increasingly complex and severe external environment” that “may exert a greater impact on China in areas such as trade, science, and technology.” The inauguration of Donald Trump and his tariffs against China are clearly on the minds of China’s leaders. For example, Li mentions that “unilateralism and protectionism are on the rise,” the multilateral trading system is “experiencing disruptions,” and “tariff barriers continue to increase.” These trends are “undermining the stability of global industrial and supply chains and impeding flows in the international economy.” All these factors, according to Li, are causing “geopolitical tensions” and “fueling the risk of volatility in global markets.”

Second, on national defense, Li repeats, almost verbatim, language from the 2024 report on the need to enhance China’s new combat capabilities to meet Xi’s 2027 centenary modernization goal for the People’s Liberation Army (PLA). Two new phrases in this year’s report are noteworthy. First, he calls for the PLA to “establish a framework of modern military theories with Chinese characteristics”; and second, he highlights the need to “move faster to develop the network information system.”

The first phrase is a new proposal for the PLA to carve out China’s distinct contribution to military theory and international relations. Chinese military strategists have for decades promoted the need for China to make original contributions to military doctrine, believing that its long history and heritage do not comport with Western theories of military development. This is a prompt for China’s strategic thinker to forge new ideas about military development.

The second phrase on the “network information system” is notable and speaks to the need for the PLA to better integrate information technology into its training and military modernization goals and is a nod to the PLA’s push for developing “intelligentization” on the battlefield. This requires that information technology, cyber, space, and autonomous platforms be more integrated into all PLA operations.

Third, Li’s language about Taiwan did not include any shifts in Beijing’s policy toward Taipei. It repeated the CCP’s “overall policy for the new era on resolving the Taiwan question,” including “staying committed to the one-China principle and the 1992 Consensus” and that China “resolutely opposes separatist activities aimed at ‘Taiwan independence’ and external interference to promote the peaceful development of cross-strait relations.”

What was new was a section on China’s economic and cultural initiatives to promote cross-strait integration. Li stated that China will “improve institutions and policies for promoting economic and cultural exchanges and cooperation across the Taiwan Strait” and “advance integrated cross-strait development to improve the well-being of Chinese people on both sides.” These new policies, which were not featured in the 2024 report, were couched within Beijing’s overall “reunification” goal with Taiwan, or, as Li phrased it, to “work with our fellow Chinese in Taiwan to realize the glorious cause of the rejuvenation of the Chinese nation.”

After the GWR’s release, China announced a 7.2% increase in its defense budget — the same number as the previous year. Given the multiple modernization goals and demands on the PLA, including supporting a blue-water navy with global ambitions, the budget increase is unsurprising. However, as the second-largest defense budget behind the United States, regional states remain concerned over China’s military trajectory and lack of transparency.

During his annual press conference on March 7, Foreign Minister Wang Yi offered unusually fiery answers on China policy under Donald Trump, pushing back against U.S. trade policies and casting China as a “source of stability” to help “anchor the world.” On U.S. tariffs and sanctions, for example, Wang said, “No country should expect to suppress and contain China on one hand while developing a good relationship with it on the other. Such a two-faced approach not only undermines the stability of bilateral relations but also fails to build mutual trust.” Wang’s comments likely foreshadow a harder line with the United States, as Beijing fashions a response to the barrage of criticism and trade restrictions emanating from Washington and, increasingly, from capitals throughout Europe.

G.A. Donovan

Social stability remains a top priority for China’s leaders. A rash of violent incidents in 2024 — blamed on family disputes and other personal grievances — raised alarms in Zhongnanhai. In the same week in November, a man angry about his failed marriage drove into a crowd at a Zhuhai sports center, killing 38, and at a school in Wuxi, 8 died when a student with academic and financial problems went on a stabbing rampage. Li Qiang’s GWR pledged to do more to resolve disputes at the grassroots level and strengthen policing and surveillance to prevent major security incidents.

Li added that public security and crime prevention would be enhanced but would continue to follow Xi Jinping’s version of the “Fengqiao experience” (the mobilization of the masses to engage in “class struggle” during the Mao period). This approach relies on concerned citizens reporting people with personal or financial problems to proactively identify “extreme cases” where family, marital, or neighborhood disputes may escalate into violence.

The growing unease about public safety was also reflected in proposals floated by delegates to the meeting of the CPPCC. Several drew attention to the increasing trend of serious crimes committed by minors, who are treated leniently in China’s justice system. These ranged from lowering the age of criminal responsibility to enforcing parental responsibility for juvenile crimes. Others urged measures to crack down on crimes against children, including abduction, trafficking, and fraudulent adoption.

Another major potential threat to the CCP’s legitimacy is persistent public dissatisfaction with the state of the economy, particularly high youth unemployment. In his report, Li said that more than 12.5 million urban jobs were created in 2024, clearing the official target of 12 million, and that the urban unemployment rate was only 5.1%. However, formidable structural employment challenges remain. China reported an official youth unemployment rate of 15.7% in 2024 using a new methodology that excludes students. Under the old method, the rate hit a record 21.3% in 2023.

Some of the proposals floated by CPPCC delegates exposed deep-seated worries about the country’s accelerating demographic crisis and how to sustain growth as the population shrinks and ages. The fertility rate dramatically declined over the past five decades, and births fell from nearly 18 million in 2016 to 9 million in 2023. Several delegates advocated measures to boost fertility, including expanding access to egg vitrification, promoting efforts to assist older women with conception, and lowering the marriage age to 18. Others called for developing the silver economy and promoting the use of AI in elderly care.

Li’s pledge to strengthen law enforcement and surveillance shows Beijing’s determination to maintain order, but it will do little to reassure people discomfited by the recent high-profile violence. And when it comes to deep structural problems, such as the looming demographic crisis and youth unemployment, the messages coming out of the Two Sessions were even less emphatic. Amid calls for tighter internal security and the relatively uncontroversial social concerns aired by CPPCC delegates, what went unsaid was how Beijing’s tighter grip on society and insistence on ideological conformity have limited the scope for public debate about how to tackle the issues that matter most for China’s future.

By LI Shuo

There were no major surprises from the NPC regarding energy and climate issues. The proposed targets reaffirm that economic growth remains the top priority, with environmental goals taking a backseat.

In the GWR, the energy intensity reduction target of “around 3%” is notably weak. Beijing faces significant challenges in meeting its 2025 energy intensity targets under the 14th Five-Year Plan, largely due to continued reliance on heavy industries and slow progress in reducing coal consumption. In this context, the 3% target means that fossil fuel consumption and CO2 emissions will grow by roughly 2% this year. As in 2024, the carbon intensity target, a key indicator of China’s climate action and its international climate pledge, did not appear in the GWR, a further sign of carbon reduction being downplayed.

Looking ahead, China plans to shift from intensity-based targets to absolute carbon emission controls during the 15th Five-Year Plan (2026–2030). This is a necessary step, as climate action ultimately depends on the absolute reduction of emissions. However, this transition period will also provide a convenient, if temporary, cover for Chinese bureaucrats as they pivot away from intensity targets they are unlikely to meet.

Given significant domestic and international uncertainties, the NPC and its traditional target-setting approach primarily serve as a political signal, often reaffirming pre-existing decisions rather than introducing new ones. The true test of China’s climate ambition will come later this year with the release of its Nationally Determined Contribution.

French: La Chine de Xi avant le prochain plan quinquennal, 5 points pour un bilan des Deux Sessions | Le Grand Continent

Spanish: La China de Xi antes del próximo plan quinquenal, 5 puntos sobre el balance de las Dos Sesiones | Le Grand Continent