How China plans to Trump-proof its economy as top lawmakers meet

BEIJING – China’s National People’s Congress (NPC) will begin its annual meeting on March 5, giving leaders a chance to set the economic direction and lay out spending plans for the year ahead. With Mr Donald Trump threatening more tariffs and the Chinese economy battling deflation and a prolonged property slump, measures to boost consumer spending will be more important than ever. Investors will be paying close attention to the strength of any new stimulus and broader policy signals, particularly after the recent surge in Chinese tech stocks fuelled by excitement around DeepSeek, to see if the rally can keep going.

What’s on the agenda?

The parliamentary meeting, held every spring, is expected to last about a week. Around 3,000 representatives from across China will gather in Beijing’s Great Hall of the People, where Premier Li Qiang will open the session with a work report. This, along with a separate budget report from the Finance Ministry, will feature key figures including the official economic growth target for 2025 – likely to stay around 5 per cent for the third consecutive year – and the fiscal deficit, which will reveal how much Beijing is prepared to spend to reach that goal. 

The government may also lower its inflation goalpost below 3 per cent for the first time in over two decades, potentially setting it at 2 per cent in a signal that policymakers are waking up to the risks of lingering deflation. The target is usually treated as a ceiling rather than a binding target.

A main focus in 2025 will be on boosting consumer spending. Policymakers may expand China’s trade-in programme for consumer goods and introduce measures to restore household confidence and unlock long-term spending potential. Possible steps include raising pension payouts for retirees, increasing subsidies for basic social insurance, and offering financial support to families raising children.

By the end of the session, these plans are expected to receive approval from the parliament.

What’s Trump’s part in this? 

While the US President is unlikely to be mentioned in any official documents at the NPC, his policies targeting China will cast a long shadow over the gathering. Since taking office, he has imposed a 10 per cent tariff on Chinese goods, sought to restrict Chinese investment in strategic US sectors like tech and energy, and urged Mexico to levy its own tariffs on Chinese imports.

The worsening trade environment poses a challenge for China’s exports, which have been a key driver of economic growth. With domestic demand still weak and Beijing reluctant to return to its old, debt-heavy growth model, the government is now placing greater emphasis on boosting consumer spending. 

Mr Li recently emphasised the need to shore up consumption as a key driver of growth, using the term “internal circulation” to signal that domestic demand will take centre stage. The phrase first emerged during the Covid-19 pandemic when China prioritised self-sufficiency, and its revival suggests Beijing is preparing for a deeper economic stand-off with the US.

What else will happen during the week? 

The NPC runs alongside the Chinese People’s Political Consultative Conference, an advisory body made up of party delegates and representatives from the arts, business and legal sectors. Together, these meetings are known as the lianghui, or Two Sessions.

After the opening plenary on the first day, lawmakers and political advisers will break into groups to review reports from Premier Li, the Finance Ministry and the national planning agency. During the week, China’s top court and top prosecutor will also present their annual reports to the parliament.

A key event will be the annual press conference by Foreign Minister Wang Yi. His briefing will be watched for clues on Beijing’s strategy for dealing with a second Trump presidency, China’s role in ending the war in Ukraine, and the future of Xi’s partnership with President Vladimir Putin, especially after Mr Trump upended years of US policy on the war by opening peace talks with Moscow.

Notably, China has scrapped a three-decade tradition of having the premier hold a press conference on the final day of the NPC, eliminating one of the rare opportunities for a top leader to engage with the public.

Will there be any surprises? 

Probably not. For decades, the annual gathering of lawmakers offered investors a rare glimpse into the personalities and thinking of the officials steering the world’s second-largest economy. But in recent years, the event has become increasingly scripted, with little room for off-the-cuff remarks or unconventional proposals that once sparked debate even in such a tightly orchestrated setting.

Instead, delegates may focus on “safe topics” that contribute to a positive narrative. One key theme is likely to be artificial intelligence (AI), particularly following the rise of DeepSeek, which has accelerated AI adoption across all levels of government. Local authorities have already begun integrating AI into law enforcement, judicial proceedings, weather forecasting and public service operations. Expect discussions to centre on both the benefits and challenges of AI as policymakers look to showcase its role in China’s future development.

Will the private sector get more support?

There have been signals that it will. President Xi Jinping recently met with top Chinese entrepreneurs, including Alibaba’s co-founder Jack Ma, a significant gesture four years after a regulatory crackdown rattled the tech industry and dampened private sector confidence. It was a clear acknowledgment that China needs private businesses, not just state-owned enterprises, to drive growth and help stabilise its struggling economy. With tech playing an even bigger role in China’s competition with the US, support for the sector is crucial. 

Mr Xi has promised to improve access to financing for private firms and curb excessive fines and penalties. Various ministries have since committed to implement his directives. To build on this, the NPC is expected to conduct a third and final reading of a bill aimed at promoting the private economy. The latest draft includes a clause banning unlawful penalties on private enterprises, signalling a broader effort to restore confidence and encourage investment. BLOOMBERG