China Sets 5% Growth Target Amid Trump Tariffs Turmoil

China is navigating economic hurdles as it aims for a 5% growth target in response to rising tariffs imposed by the US.

China has officially announced its economic growth target for the year, aiming for "around 5%" as it grapples with the fallout from the ongoing trade war with the United States. The plan was revealed during the National People's Congress (NPC), a key legislative meeting that occurs annually. Although decisions are often pre-determined, this year's discussions draw increased attention as they unveil potential policy shifts necessary to combat economic hardships.

President Xi Jinping must now navigate an economy struggling with low consumer demand, a severe property crisis, and rising unemployment linked to the additional 10% tariffs recently imposed by the US. The cumulative effect of these tariffs, totaling 20%, exacerbates the challenges faced by the Chinese export sector, which had been a vital engine of the economy.

Chinese authorities wasted no time responding, immediately imposing retaliory tariffs on select US agricultural products, including corn and soybeans — vital commodities for both nations. The NPC's focus this week shifts to strategies for economic growth in the context of diminished export prospects.

Experts warn that prolonged tariffs could reduce US-bound exports by up to 33%, emphasizing the need for a robust domestic market to achieve the 5% target. With traditional growth sources under pressure, analysts suggest that enhancing domestic consumption must become a top priority. Proposals to stimulate consumer spending, such as facilitating upgrades on essential goods including cars and electronics, are expected to be rolled out.

Despite the daunting economic landscape, Chinese officials project optimism. Liu Jieyi, representing the Chinese People's Political Consultative Conference (CPCC), expressed confidence in China's economic fundamentals, suggesting that inherent stability and potential remain strong amidst low demand trends.

Investment in "high-quality development" is also in focus, particularly in sectors such as renewable energy and artificial intelligence (AI). China aspires to become a leading global tech power, particularly in light of heightened competition with the West. Recent innovations, such as those from DeepSeek and Unitree Robotics, have garnered international attention, reinforcing the narrative of China's potential in the tech sphere.

Nonetheless, the persistent tariffs threaten to undermine these aspirations, potentially deterring foreign investments crucial for growth. Analysts caution that the uncertainty surrounding tariffs creates a challenging environment for both exports and overall investment. As the country seeks to chart a sustainable path forward, adapting to both domestic and international pressures will be critical for maintaining economic stability and achieving the ambitious growth target set for this year.