Lujiazui, the financial center in Shanghai, forms a perfect backdrop to the Bund area.
Stimulating domestic demand key to stabilizing markets
The Government Work Report submitted to the National People's Congress, China's top legislature, for deliberation on March 5, has set a growth target of 5 percent, with an inflation target of 2 percent, and an official budget deficit of 4 percent of GDP. The policy priorities include stimulating domestic demand, promoting technological innovation, and stabilizing the housing and stock markets.
Fiscal policy is proactive, with a focus on supporting consumption and investment. The government has allocated funds to boost consumer spending and equipment upgrades. Monetary policy is moderately loose, aiming to maintain ample liquidity and support growth.
Risk prevention is a key focus, with measures introduced to stabilize the housing and stock markets and manage local-government debt. Tech and green development remain priorities, with an emphasis on the private sector's role in innovation.
Overall, the government's policy priorities are focused on stimulating domestic demand and promoting technological innovation. While the announced fiscal stimulus is expected to partially offset the impact of tariffs imposed by the United States, additional stimulus may be necessary if growth momentum indicates significant downside risks. The government's proactive fiscal policy and moderately loose monetary policy are expected to support growth, while the emphasis on risk prevention and tech and green development will help to ensure sustainable and high-quality growth.
The author is Ding Shuang, chief economist for Greater China and North Asia, Standard Chartered Bank.
China remains locomotive of global growth
This is an eventful week for the global economy. The US administration is unleashing commercial "fire and fury" by doubling down on tariffs, while China is holding its two sessions, announcing its core economic policy aims and governance priorities for the new year.
What stands out in the Government Work Report is the continued confidence in Chinese policy circles that the Chinese economy can achieve 5 percent GDP growth in 2025. In monetary terms, China is expected to add to its GDP an amount greater than the combined increase in the United States, the European Union and Japan.
Even more significant for the global economy, however, is the qualitative transformation of China's economic structure. Recent trends make it clear that China has moved up the value chain in production. It has shifted from labor-intensive industries driven by perspiration to high-tech manufacturing driven by innovation, as it seeks to cultivate new quality productive forces.
What is even more striking is that China's path toward new quality productive forces is being driven by its private companies, specifically the "Majestic Four" of BYD, DJI, DeepSeek, and ByteDance.
In terms of recent economic governance and reform, China has successfully redirected resources from an overheated real estate sector to industry. No other country could have achieved such a politically painful deleveraging of its real estate market (due to intensity of vested interests) while effectively channeling capital into new industries.
China also faces an external shock from rising US protectionism. While Chinese exports to the US as a share of China's GDP are not as significant as they were in 2018 when the US launched the tariff war, a negative shock could still impact the Chinese economy. Moreover, it remains uncertain whether the Global South (which now absorbs more Chinese exports than the US and EU combined) will be able to sustain China's industrial export growth.
Given the need to boost domestic demand amid external trade pressures, it is understandable that the Government Work Report has increased the budget deficit target from 3 percent in 2024 to 4 percent in 2025. The work report has made it clear that proactive fiscal expansion is on the horizon. While some economists anticipated even higher levels of deficit spending, caution is warranted. One needs to consider the potential for monetary expansion, which China has the capacity to pursue given its low annual inflation rate, expected at approximately 2 percent in 2025.
China's key targets for 2025, along with its recent economic performance, confirm that it remains the indispensable locomotive of the global economy. Predictions of economic collapse or claims of "Peak China", often circulated by pundits, are unfounded.
The critical question for China's economy in the years ahead will relate to the way the Chinese leadership continues to pursue reform and opening-up amid an increasingly antagonistic geopolitical environment.
The author is Vasilis Trigkas, a visiting assistant professor of Global Affairs at the Schwarzman College, Tsinghua University.
Common vision for financial cooperation
Mauritius' Government Programme 2025-2029, delivered by the President of the Republic of Mauritius Dharam Gokhool on Jan 24, and the Government Work Report delivered by Chinese Premier Li Qiang on March 5 share a common vision of financial modernization, economic resilience, and international cooperation. Both countries recognize the strategic importance of financial sector reforms and enhanced monetary cooperation in global trade and investment. With Mauritius' ambition to reinforce its position as a regional financial hub and China's continued push for the RMB's internationalization, the two nations have a unique opportunity to deepen financial cooperation, leverage the Mauritius-China Free Trade Agreement, and extend financial cooperation into the broader Southern African Development Community region.
A key milestone in this evolving financial relationship was the 2 billion yuan ($276 million) currency-swap agreement between the Bank of Mauritius and People's Bank of China, signed in September 2024. This agreement enhances liquidity for RMB-denominated transactions, facilitates cross-border trade and investment. Mauritius can leverage this currency-swap deal to position itself as a regional RMB-clearing center with China expanding its financial footprint on the African continent, thus attracting African businesses seeking access to Chinese capital markets.
As an international financial center, Mauritius can integrate itself into China's financial ecosystem, offering RMB-settlement services, trade financing, and digital payment platforms tailopred for businesses operating in the continent. By aligning with China's cross-border interbank ayment system, which is a renminbi-based settlement system, Mauritius can enhance the efficiency of RMB transactions in the SADC region, enabling smoother trade and investment flows between African economies and China.
Mauritius' Government Programme 2025-2029 also prioritizes modernizing the financial services industry, adapting the global business sector, and enhancing regional economic integration. Given that Mauritius already serves as a gateway for African trade and investment, financial cooperation with China can extend beyond bilateral exchanges to the broader SADC region, which includes key economies such as South Africa, Tanzania, Zambia, and Angola. By working with Chinese financial institutions, Mauritius can facilitate the expansion of RMB liquidity and trade financing solutions across SADC countries, supporting economic diversification and industrialization in the region.
The emphasis on green finance and sustainable investments in both reports also presents an opportunity for Mauritius and China to collaborate on RMB-denominated green bonds and environmental, social and corporate governance (ESG)-compliant financial instruments. This can attract Chinese capital into infrastructure, renewable energy, and digital finance projects in the SADC region, fostering sustainable economic growth while reinforcing Mauritius' role as a regional financial hub.
Looking ahead, Mauritius and China can focus on deepening their financial collaboration by strengthening institutional frameworks, promoting RMB usage in trade agreements, and integrating African economies into China's financial networks. By leveraging the currency-swap agreement, the MCFTA, and China's global financial reforms, Mauritius has the potential to anchor China's financial expansion in the African continent, ensuring a stronger, more resilient, and interconnected regional economy.
The author is Hans Seesaghur, international affairs specialist and sinologist, former China chief representative at the Mauritius Economic Development Board Representative Office in Shanghai, and former Economic and Commercial Counsellor at the Embassy of Mauritius in Beijing.
Private sector to get more support
The government's growth and fiscal deficit targets for 2025 are broadly in line with market expectations. The government maintained a 5 percent real GDP growth target despite headwinds from US tariffs. According to Premier Li Qiang, a 5 percent growth target is not only necessary for ensuring stable employment and preventing risks, it is backed by China's growth potential and aligns with the government's medium- and long-term objectives. It is a challenging goal that the government will strive to achieve. Fiscal deficit is set at 4 percent of GDP, the highest in decades and breaching a long-standing 3 percent deficit ceiling.
We are encouraged by the government's new 2 percent consumer inflation target. Although lower than the 3 percent in earlier years, the government has attached a new meaning to it. At a press conference, a government official explained that the new inflation target is "a proactive signal with a clearer policy message": the government will "strengthen the guiding role of price indicators" and "make all efforts to promote a moderate rebound in prices". We think this means the government has moved away from the previous approach of setting an inflation ceiling toward a formal 2 percent inflation target, which demonstrates its commitment to preventing deflation.
Swift and coordinated implementation policies is stressed. A new emphasis from the work plan is that policies should be enacted "as early as possible to preempt uncertainties" and should be "fully implemented in one go" to maximize its effectiveness. The work plan also stressed on the need to pay attention to market feedback and foster positive expectations. These statements seem to suggest the government has reflected on lessons from the past. The market will likely welcome it if the government can deliver its supportive policies in a timely and coordinated manner this year, instead of a gradual/piecemeal approach in recent years.
Consumption ranked first among the government's priorities. The government will promote an "AI plus" initiative to accelerate the extensive application of large language models, enabling AI to empower all industries from traditional manufacturing to emerging services sectors.
The government is turning more supportive of the private sector, proposing a number of policy measures. For the stock market, a few policies are worth highlighting: the government will forcefully promote long-term funding flows, such as from insurance companies and pension funds, into the stock market; it will enhance "market stabilization mechanisms" which could include stabilization funds; and the government will curb "involutionary competition" and price wars, which, if implemented effectively, could benefit industries with thin profit margins such as solar and autos.
The author is Xiong Yi, Deutsche Bank's chief China economist.
IPR a strong catalyst for innovation
In recent years China has witnessed a series of remarkable developments that underscore its growing innovation capabilities across technology and culture. On the scientific and technological front, the emergence of DeepSeek, an advanced large language model, has attracted widespread attention for its cutting-edge natural language processing capabilities. With transformative applications spanning education, healthcare, and business, DeepSeek exemplifies China's strength in driving new breakthroughs in artificial intelligence. On the cultural front, Ne Zha 2, a record-breaking animated film, reimagines traditional Chinese mythology with innovative storytelling and state-of-the-art visual effects, demonstrating how China is leveraging its rich heritage to create compelling narratives that resonate globally.
These groundbreaking advancements represent just a snapshot of China's innovation achievements. The 2025 Government Work Report highlights substantial progress in key areas such as integrated circuits, AI, quantum technology, and beyond. Among the notable milestones, the Chang'e 6 mission was the first to successfully collect samples from the far side of the moon, while the ocean-drilling vessel, Mengxiang (dream in English) marked a significant leap in deep-sea exploration.
In the realm of quantum computing, the Zuchongzhi-3 quantum computer, with its 105 qubits, has outperformed global benchmarks in random circuit sampling, moving closer to practical quantum computing applications.
Meanwhile, rapid advancements in 6G technology promise to revolutionize communications by enhancing speed, reducing latency, and bridging the physical and digital worlds, laying the foundation for the Internet of Intelligence. Additionally, embodied intelligence is making strides, with humanoid robots – featured prominently during the 2025 CCTV Spring Festival Gala – heralding the deeper integration of AI into daily life and industrial applications.
China's innovation leadership is further reflected in its rising position in the Global Innovation Index, the World Intellectual Property Organization's annual ranking of the world's most innovative economies. In 2024, China climbed to 11th place, maintaining its distinction as the only middle-income economy in the GII Top 15 for many years. Notably, China ranks first in eight of the 78 GII indicators, including domestic market scale, state of cluster development, high-tech exports, and creative goods exports. The 2024 GII also highlighted that China leads the world with 26 of the top 100 science and technology clusters, holding this position for the second consecutive year.
At the heart of these achievements lies intellectual property, which serves as a vital driver of innovation. Recent data from the China National Intellectual Property Administration underscores this trend: in 2024, Chinese applicants filed 69,300 international patent applications — the highest globally — via WIPO's Patent Cooperation Treaty. Similarly, China led in international design filings under WIPO's Hague System with 4,868 designs included in its Hague filings, and Chinese applicants recorded 7,039 international trademark registrations through WIPO's Madrid System. Domestically, China continues to lead the world in patent, trademark, design filings, and copyright registrations. These figures reflect the increasing recognition among Chinese innovators and businesses that IP is a powerful tool for transforming ideas into marketable assets and securing their competitive edge both at home and abroad.
China's longstanding commitment to innovation and IP protection has fostered the development of a robust IP ecosystem that fuels technological and creative progress. The 2025 Government Work Report reaffirms the country's strategic focus on enhancing its innovation system, with IP protection positioned as a key enabler of this vision. This aligns closely with WIPO's global perspective on IP as a catalyst for economic growth, job creation, and business expansion.
Building on over 50 years of strong cooperation with China, WIPO remains committed to deepening its partnership with the country to support its innovation-driven development. As a bridge between the WIPO headquarters in Geneva, Switzerland, and China, the WIPO Office in China is dedicated to engaging with frontier technologies, emerging industrial leaders, and dynamic innovation clusters. Through tailored and high-quality IP services, the WIPO Office in China will continue to contribute to China's journey toward a more innovative and globally competitive future.
The author is Liu Hua, director of the World Intellectual Property Organization's China office.
Major targets, budget numbers in line with forecasts
On March 5, Premier Li Qiang delivered the 2025 government work report at the National People's Congress (NPC). According to the report, all major policy targets and budget numbers are in line with our predictions. We agree with Li's comment that "achieving this year's targets won't be easy", and we maintain our GDP growth forecast for this year at 4.5 percent. We expect China might once again ramp up policy support in the second half year.
Similar to the past couple of years, we expect China's economy to start the year strongly (which it has), only to face much stronger downside pressure later this year. Recently, the surprising breakthrough of DeepSeek triggered a stock market rally, which may boost investment and consumption. The expansion of the trade-in program is stimulating sales of digital goods, and expectations of massive tariff hikes by the Trump administration have led to front-loading, while the latest round of property easing measures has released some pent-up demand for homes in large cities.
The report doubled down on its commitment to sustain forceful efforts to stem the decline in the property sector, rolling out city-tailored easing measures and ramping up urban village renovations while tightening the reins on new land supply and tackling housing inventory. Local governments can tap this year's 4.4 trillion yuan in the local government special bond pool to fund land and inventory purchases. In addition, local authorities will have more discretion over inventory buyouts – deciding buyers, prices, and usage – while the scope of the PBoC's affordable housing re-lending facilities will be expanded. The report also vowed to provide financing support for developers to mitigate debt defaults and ensure the delivery of pre-sold homes.
The author is Lu Ting, chief China economist of Nomura.
Source: China Daily