As US rivalry hots up, Beijing sets steady growth target and looks to wider world

Buffeted by pressures at home and chaos abroad, China is charting a deliberate and measured course to help it navigate the turbulent seas in the year ahead. Premier Li Qiang, in his annual address to the National People’s Congress, set out targets for the year – still aiming for growth of around 5 per cent to help drive the economy, boost flagging consumption, and propel an overhaul leading to economic transformation amid intensifying geopolitical uncertainty. It is a critical juncture as one five-year plan ends and another begins. Li’s speech took place as US President Donald Trump addressed Congress just over a month into his new term. The strategic directions outlined in their addresses were a study in contrasts. Trump declared a global tariff war on friend and foe alike, after already imposing 25 per cent on neighbours Canada and Mexico, and 20 per cent on China. While turbulence has seemed to spiral from the White House, the watchwords in Beijing concern stability, and taking a measured and deliberate path to quality growth. The domestic policy objectives reveal different approaches. The United States is aggressively cutting government spending. China, on the other hand, sees good governance as the key to growth, though it is being focused and selective about what it funds. Specifically, Li targeted science, technology and the private sector. Trump has placed unprecedented pressure on traditional alliances. His warming of relations with Russian President Vladimir Putin and halting of weapons and aid to Ukraine has upended an Atlantic alliance that has been a cornerstone of Western diplomacy for 80 years. European nations are scrambling to boost defence spending and to stand with Kyiv. Open for investment Internationally the superpowers are signalling a sharply different approach. The US appears to be turning its back on the world, with Trump singling out allies India, the European Union and South Korea as his next tariff targets, and promising to protect American farmers from agricultural imports so they may dominate the vast US market. China, by contrast, is pursuing the opposite. Whatever the external environment, Li stressed, the country would be open to foreign investment and business, and continue its long-standing reforms. Telecoms, healthcare and education would be further opened up to foreign investors, together with an orderly opening of the internet and cultural sectors. And when it comes to developing science and technology, Beijing aims to invite more foreign talent to come and help. Even as the US pulls back, China is doubling down on connecting itself with the world, especially developing nations and those in its Belt and Road Initiative, the plan to grow global trade. The targets Li outlined for the coming year are, from Beijing’s standpoint, relatively aggressive. To hit the growth target, Li proposed that China issue a total of 1.3 trillion yuan of ultra-long special treasury bonds, up 300 billion yuan from last year. He set the deficit-to-GDP ratio at 4 per cent, an increase of one percentage point over last year, a historic high and a bold step for Beijing, given the size of the world’s second largest economy. If “aggressive” is too strong a word, a better description may be proactive fiscal policy, in which China balances risks with the need to stimulate its economy. To that end, Li stressed the need to cut back on unnecessary spending, red tape and wasteful investment, soften the local government debt burden and manage financial and real estate sector risks. Social safety net At the heart of the national development policy is the drive to become an international leader in science and technology. Li stressed China would establish a mechanism for “future industries” to support hi-tech development, including in quantum technology, 6G, biomaterial manufacturing and embodied intelligence. This shift has been emphasised by President Xi Jinping in his push to wean the economy off its reliance on low-end manufacturing and property development in favour of high-quality sectors leveraging technology. As Washington retreats, cutting USAID and funding at consular offices globally, Beijing will continue to reach out. Diplomatic spending will increase sharply and that of the military will, as last year, rise moderately, a sign Beijing prefers to pursue economic development rather than ease into drastic action on Taiwan. For Hong Kong, Li highlighted the importance of the Greater Bay Area and said for the first time that Beijing would support the city and Macau in deepening international exchanges and cooperation, underscoring their new prominent role in national development. Hong Kong must leverage strength as a “superconnector” under “one country, two systems”, to attract foreign investment, trade and commerce. China’s problems are daunting. The social safety net has frayed, consumers remain cautious about spending and the drive for growth in high-quality sectors is under way, but the dividends are yet to arrive. Faced with a more chaotic world and a fractious superpower rivalry that is only becoming more challenging, the wise approach is for the country to become even more focused and stable, and pursue a measured approach while managing internal and external risks.

As US rivalry hots up, Beijing sets steady growth target and looks to wider world

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}China’s premier charts stable course through Trump global chaos on measured path to economic overhaul by managing internal and external risks

China’s premier charts stable course through Trump global chaos on measured path to economic overhaul by managing internal and external risks