The annual Two Sessions is the closest thing to a carnival in Chinese politics. Thousands of leaders, bureaucrats, experts, reporters, and celebrities from across the country flock to Beijing for a week of political pageantry. While the premier’s annual “state of the union” address is more restrained than its American counterpart — U.S. President Donald Trump is scheduled to address a joint session of Congress just a day earlier — it remains a key indicator of China’s economic direction.

The Two Sessions refers to the concurrent annual meetings of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), which opens on March 4, and the National People’s Congress (NPC), which begins on March 5. These meetings are expected to conclude on or around March 11.

Both institutions answer to the Chinese Communist Party, led by General Secretary Xi Jinping. The CPPCC National Committee, with 2,169 members, serves as the overarching organization of the United Front system, which mobilizes various social groups to support and advise the Party. Meanwhile, the NPC, with 2,977 delegates, functions as a single-chamber parliament that is, at least notionally, the supreme organ of state power.

Anticipation surrounding this year’s event has been heightened by a rare “symposium on private enterprises” that Xi hosted on February 17, attended by some of the country’s top entrepreneurs. This uncommon symposium, last held in 2018, raised hopes for China’s struggling economy — particularly following the January return of President Trump, a self-proclaimed “tariff king” who has already imposed an additional 10% levy on Chinese imports. Now, attention shifts to how much Beijing is willing to boost stimulus, support businesses, and respond to Trump’s trade policies.

The Two Sessions is expected to reveal a more pro-growth agenda compared to last year, with approximate targets of 5% for GDP growth, 4% of GDP for the fiscal deficit ratio, and 2% for consumer inflation. Further stimulus will come from roughly 3 trillion yuan in ultralong special treasury bonds and 4.5–5 trillion yuan in local government special-purpose bonds. Measures to boost consumer spending and encourage private-sector innovation will also be introduced. While Beijing aims to stabilize growth, it is unlikely to unleash the proverbial “bazooka” stimulus, as it needs to conserve fiscal resources for a potential trade war. Similarly, sweeping structural reforms remain improbable as the government remains committed to Xi’s vision of high-tech industrial self-reliance.

A key focus of the Two Sessions will be the Government Work Report (GWR), which Premier Li Qiang will present to the NPC on behalf of the State Council on March 5. The report will review the government’s work in 2024, outline economic priorities for 2025, and set major policy tasks for the year ahead. Headlines will center on annual targets for growth, deficits, and inflation.

The GWR is expected to reinforce priorities set by the Party late last year. On December 9, the Politburo announced a shift in China’s monetary policy stance from “stable and prudent” to “appropriately loose” — an expansionary move and the first of its kind since 2010. It also signaled stronger fiscal stimulus, calling for a “more proactive fiscal policy” and an enhancement of “extraordinary counter-cyclical adjustments.” A few days later, at the Central Economic Work Conference (CEWC) held on December 11–12, officials pledged to “increase the fiscal deficit ratio” and prioritize “vigorously boosting consumption, improving investment efficiency, and expanding all-round domestic demand.” Beijing is poised to take further steps to support growth in the coming year — though it is unlikely to diverge from Xi’s overarching economic strategy.

China will likely maintain a GDP growth target of “around 5%” for the third consecutive year. Provincial governments, which present work reports to local parliamentary gatherings ahead of the Two Sessions, have set growth targets with a weighted average of 5.1%. This target is ambitious, given higher U.S. tariffs, skepticism about Beijing’s claim that it met its 2024 target, and ongoing struggles with a property market correction, weak consumer sentiment, and strained local finances. To achieve this target, Beijing will expand fiscal stimulus, lower bank reserve requirements, and cut interest rates — though concerns over potential capital flight will constrain its monetary policies. The more U.S.-China trade and technology tensions escalate, the more aggressively Beijing may implement stimulus measures.

Reports indicate that China will set a record-high fiscal deficit ratio target of 4% of GDP. This implies an additional 1.3 trillion yuan in spending within the general budget but does not fully capture the extent of fiscal stimulus. Beijing will also raise more off-budget funds through ultralong special treasury bonds, first introduced last year with a 1-trillion-yuan issuance, and local government special-purpose bonds, which had a target issuance of 3.9 trillion yuan in 2024. Speculation suggests that these figures will rise substantially this year, reaching at least 3 trillion yuan and 4.5 trillion yuan, respectively.

China is expected to lower its consumer inflation target ceiling from 3% to around 2%. This adjustment aligns with expansionary monetary and fiscal policies, as Beijing has consistently fallen short of its targets in recent years, recording just 0.2% inflation in both 2023 and 2024. Deflationary pressures persist as the ongoing property correction continues to erode household wealth and suppress consumer spending. Every provincial-level government has set a 2% inflation target. If applied nationally, this would mark the lowest target since the early 2000s and the first time in over two decades that the figure falls below 3%.

China will also announce annual targets for new urban jobs and the urban unemployment rate. Last year, Beijing set these targets at 12 million new jobs and 5.5% unemployment, and this year’s figures will likely be similar. Employment remains a politically sensitive issue due to its potential link to social unrest, making it one of the few economic indicators for which official targets are always met — at least according to government statistics.

The Party mapped out China’s political economy for the remainder of this decade during its Third Plenum in July 2024. Xi reaffirmed his commitment to the concept of “high-quality development,” which prioritizes central guidance, industrial capacity, technological self-reliance, environmental protection, and social welfare over rapid growth and market forces. This approach has favored investment in high-tech “new productive forces” — last year’s Two Sessions buzzword — rather than boosting household consumption.

Despite the CEWC placing consumption at the top of its priority list, Beijing has a history of failing to follow through on its commitments to boosting domestic demand. No transformative policies appear to be in the pipeline, although the GWR is expected to announce an expanded “cash-for-clunkers” subsidy scheme to encourage the replacement of outdated appliances and machinery. Efforts to stabilize the housing market and increase social spending on pensions, healthcare, and child-rearing will provide some relief to households, but most stimulus is still expected to flow to enterprises and local governments.

Any stimulus package that Li Qiang unveils at this year’s Two Sessions should be seen as a short-term stabilization measure aimed at supporting Xi’s longer-term economic strategy. The most optimistic outcome that could plausibly make it into the GWR would be a commitment to aggressively implementing the structural reforms proposed at the Third Plenum but not yet meaningfully enacted. These include decentralizing fiscal responsibilities, strengthening the tax system, and removing internal market barriers — all of which were highlighted in the CEWC readout. However, whether the political will exists for such reforms remains uncertain, as concrete details and action plans have yet to emerge.

Beyond these broad measures, the CEWC has outlined seven priority areas for boosting consumption in 2025, signaling where policy support is likely to be concentrated. These include positioning China as a hub for product launches, winter tourism, and the “silver economy” focused on catering to an aging population. Other priorities involve recalibrating platform economy regulations, stimulating economic activity in smaller cities, integrating the Greater Bay Area, and expanding investment in maritime industries. On February 20, Li hosted a State Council study session on “vigorously boosting consumption to expand domestic demand,” emphasizing experience-based services as a top priority.

Beijing is betting that a massive Party-led push for research, innovation, commercialization, manufacturing, and digitalization can create new economic growth drivers to replace the real estate sector and generate productivity gains that help mitigate issues related to debt, demographics, and dependence on the West. Trump’s return has heightened concerns over the latter, prompting Li to tell the State Council on February 5 that the GWR must “integrate resolving domestic economic problems with responding to external challenges and be good at turning pressure into motivation.” Li emphasized the need to “create more outstanding highlights that can provide impetus to our overall situation,” possibly alluding to DeepSeek, China’s AI sensation, whose founder, Liang Wenfeng, briefed him two weeks prior.

Beijing’s AI push is gaining momentum, with central state-owned enterprises now explicitly tasked with making AI a strategic priority in the 15th Five-Year Plan. The State-Owned Assets Supervision and Administration Commission of the State Council recently directed them to seize the “strategic window” for AI development by leveraging China’s vast market demand, deep supply chains, and diverse application scenarios. Beyond deployment, Beijing is emphasizing the mastery of “root technologies” and fostering “zero-to-one” breakthroughs, particularly in large language models and open-source ecosystems. Notably, the directive calls for major investments in data, computing power, and “patient capital” to sustain long-term innovation.

However, the current process of structural change is reinforcing an export-reliant growth model, which could have long-term consequences for China’s economy. It is depressing consumption, driving down prices and incomes, and restraining profits and private investment. This makes exports even more crucial both economically and politically, which runs the risk of creating a vicious policy cycle that could prove difficult to break and risk exacerbating trade tensions by fueling overcapacity concerns abroad.

Xi’s private enterprise symposium successfully generated widespread attention, reinforcing the prospect of a more business-friendly environment in Beijing. He shook hands with top entrepreneurs, including the once-sidelined Alibaba founder Jack Ma, and pledged to “promote the healthy development and high-quality development of the private economy.” Beijing is clearly working to restore confidence after years of regulatory crackdowns, bureaucratic interference, and sluggish private investment. The government is sending a strong message — not just to entrepreneurs but also to regulatory bodies and local governments — that China needs its private sector. In recent days, there have been moves to improve market access, expand private participation in major government policies, and fast-track the Private Economy Promotion Law.

This endorsement is aimed at improving business sentiment, but its primary goal is to mobilize the private sector to advance tech-driven productivity and supply-chain resilience, both of which are key to Xi’s state-guided economic strategy. Xi emphasized that entrepreneurs should “dedicate themselves to serving the country,” urging them to align with national policies and support government priorities. Unsurprisingly, many speakers at the symposium represented industries central to U.S.-China competition. The event largely reaffirmed existing Party commitments to the private sector, meaning most firms are likely to wait for tangible improvements before making significant changes to their business plans.

Concerns over last year’s record-high foreign direct investment (FDI) outflows and a 27.1% drop in actual utilized foreign investment may prompt further policies to attract foreign investors. The CEWC affirmed Xi’s call for greater “independent opening” and “unilateral opening” at last November’s APEC summit. The release of a Foreign Investment Stabilization Action Plan on February 19 marks China’s first standalone recalibration of FDI policy in nearly four decades — an acknowledgment of Beijing’s urgency to stem capital flight.

The plan reflects a strategic shift in Beijing’s approach — moving away from tax breaks and subsidies toward sector-specific liberalization, regulatory streamlining, and reinvestment incentives. It codifies new measures offering expanded access to value-added telecommunications services, wholly foreign-owned hospitals, and streamlined drug approvals, aligning FDI more closely with government priorities. There is also a strong push to retain FDI through eased restrictions on mergers and acquisitions and improved access to domestic financing channels.

This strategy underscores Beijing’s broader goal: anchoring foreign businesses within China’s regulatory framework to turn them into long-term stakeholders, making local expansion more appealing than reallocating capital to other markets. However, while the FDI plan signals strong intent, global investors will look beyond rhetoric for concrete regulatory improvements, expanded market access, and greater capital flow flexibility. The Center for China Analysis will closely monitor FDI trends in key sectors, including telecommunications, healthcare, pharmaceuticals, and education.

Li Qiang is unlikely to announce any major shifts in foreign policy or Taiwan policy. Each year, analysts closely examine the GWR for new changes in wording on these issues, but such variations are rarely significant, as Xi remains the primary decision-maker. For instance, Li omitted the phrase “peaceful unification” from last year’s GWR, yet the very next day, Xi urged CPPCC members to promote that exact principle.

The most important Two Sessions data point related to foreign policy is Beijing’s military budget. Last year, China announced military spending of RMB 1.67 trillion, a 7.2% increase from 2023 — the same proportional annual change as the previous year. However, these figures should be interpreted with caution when compared to GDP statistics, as they represent nominal rather than real increases.

Additionally, Wang Yi is expected to hold the annual foreign minister’s press conference on March 7, where he will provide a more detailed overview of China’s foreign policy than what is outlined in the GWR. He will likely stress China’s red lines and address the U.S.-China economic and trade relationship. However, major policy shifts or groundbreaking statements are unlikely — the key watchpoint will be whether Xi himself makes direct comments on U.S.-China relations.

One of the most pressing questions in Chinese politics — particularly for international observers — is how Xi will respond to the tariffs and threats issued by U.S. President Donald Trump. How much will Beijing be willing to compromise to secure a deal? How will China retaliate against future U.S. economic measures? Will Xi adopt a stance of restraint, or will he engage in mutual escalation with Washington? And how will China navigate the evolving U.S.-Russia rapprochement?

Xi does not deliver a major speech at the Two Sessions, but he will address an NPC provincial delegation, a CPPCC sectoral group, and the NPC delegation from the People’s Liberation Army (PLA) and the People’s Armed Police. Last year, he met with the NPC delegation from Jiangsu Province and CPPCC members representing the Revolutionary Committee of the Chinese Kuomintang, the environmental sector, and the technology sector.

Xi could use these addresses to send key signals about U.S.-China relations. Two years ago, he told a CPPCC group that “Western countries, led by the United States, have implemented comprehensive containment, encirclement, and suppression against China.” If he revives such language, it would suggest a shift back toward confrontation with the United States — especially after its omission last year, following the stabilization of bilateral ties at the Woodside Summit in November 2023.

So far, Trump’s disruption of traditional U.S. diplomacy has enabled China to position itself as a defender of the global economy and international order — a dynamic that seemingly serves Xi’s interests. Beijing’s response to Trump’s initial 10% tariffs was measured — restrained enough to signal openness to negotiations yet firm enough to demonstrate its willingness to escalate if necessary. Xi is treading carefully, likely seeking to avoid provoking Trump, as he may view an in-person meeting as a way to slow the momentum of U.S. tariffs, sanctions, and export controls.

Xi’s remarks often reveal his stance on economic issues, sometimes in unusually personal terms. Last year, he expressed skepticism about direct consumer stimulus, stating that the Party must “motivate the broad masses to rely on their own two hands to create a happy life.” He also outlined Beijing’s three-pronged industrial policy of “upgrading traditional industries, expanding emerging industries, and cultivating future industries.” Any concessions to foreign concerns about overcapacity seemed doubtful after he delivered a lengthy tribute to China’s “arduous struggle for self-reliance” in manufacturing.

One of the most significant potential developments would be if Xi comments on the 15th Five-Year Plan, which will define China’s economic and social development priorities for 2026–2030. The plan is scheduled for release at the Two Sessions in March 2026, and Xi is expected to convene a Fourth Plenum of the Party’s Central Committee later this year to provide high-level guidance on its content.

The biggest surprise at last year’s Two Sessions was the cancellation of the premier’s annual press conference, a tradition dating back to the 1990s. Li Qiang’s absence from the spotlight underlined the State Council’s subordination to the Party under Xi, a political reality that was formally codified at the same event through a revision to the State Council Organic Law. A revival of the press conference seems unlikely, but if it were to return, it would signal Xi’s growing trust in Li.

The Two Sessions also provides insights into Beijing’s broader political landscape. Any changes in the visibility of senior leaders could indicate shifting political dynamics. State media will highlight certain delegates and policy proposals, offering a glimpse into the government’s priorities — or at least what it wants to be perceived as prioritizing. Some attendees may even seize the spotlight to make bold or provocative statements, much like Peking University Professor Jia Qingguo, who last year called for relaxing restrictions on scholarly exchanges and travel.

Two officials to watch are Pan Gongsheng, governor of the People’s Bank of China, and Zheng Shanjie, director of the National Development and Reform Commission. Pan played a central role in launching Beijing’s most recent stimulus push, leading a press conference on September 24 that introduced a series of monetary policy measures — a move that immediately reinvigorated Chinese capital markets. Two days later, Xi chaired a Politburo meeting that reaffirmed this new direction. However, Zheng’s follow-up press conference dampened market enthusiasm, as it failed to identify any tangible new fiscal policy measures. Pan’s influence appears to be on the rise, with the CEWC pledging to “explore expanding the central bank’s macro-prudential and financial stabilization functions.” Meanwhile, Zheng has come under pressure to improve his performance in economic policymaking.

The annual NPC session has the authority to appoint and remove State Council leaders but rarely serves as a venue for major personnel changes, except during the quinquennial turnover following a Party Congress. Last year, speculation swirled that Beijing would appoint a new foreign minister to replace Qin Gang, but Wang Yi — whose primary role remains director of the CCP Central Foreign Affairs Office — retained the position after reassuming it following Qin’s dismissal.

The NPC could also elevate Defense Minister Dong Jun to the higher-ranking concurrent role of state councilor, a position held by many of his predecessors. However, this seems unlikely, as Xi has already passed up multiple opportunities to promote Dong. His lower status may serve as a form of political retribution against the PLA for the ongoing corruption scandals that continue to shake its top ranks.

Beijing will not release agendas for the CPPCC and NPC meetings until the day before they begin, but based on past practice, the dates in the table below should be reasonable estimates. Observers can also monitor the Beijing Municipal Public Security Bureau’s forthcoming annual notice on low-altitude aircraft restrictions during the Two Sessions to determine the end date. Much of the time will be dedicated to CPPCC members and NPC delegates deliberating the drafts of various reports — though meaningful revisions are rarely made before final adoption at the end of the Two Sessions.

The authors are grateful to CCA members Lizzi C. Lee, Lobsang Tsering, and Shengyu Wang for their contributions to this report.

French: La Chine de Xi face à la disruption Trump: 10 points pour préparer les Deux Sessions | Le Grand Continent

Spanish: La China de Xi frente a la disrupción Trump: 10 puntos para preparar las Dos Sesiones - El Grand Continent