Work report: GDP target 'around 5%'

China has set the GDP growth target at "around 5 percent" for 2025, the same as last year's, as the world's second-largest economy emphasizes stimulating domestic demand across the board with more supportive policies, according to the Government Work Report released on Wednesday.

Premier Li Qiang, who delivered the report at the opening of the third session of the 14th National People's Congress in Beijing, said that a target of around 5 percent is well aligned with the country's mid- and long-term development goals and underscores the resolve to meet difficulties head-on and strive hard to deliver.

The country will pursue a more proactive fiscal policy and exercise a moderately loose monetary policy this year, with the projected deficit-to-GDP ratio set at 4 percent for 2025, up from 3 percent last year, according to the report, which has been submitted to the country's top legislature for deliberation.

The Chinese government started to release the annual projected deficit ratio in 2010, with the highest reading in 2020 at 3.6 percent as COVID-19 hit, according to market tracker Wind Info.

The work report also said China will issue 1.3 trillion yuan ($178.95 billion) in ultra-long-term special treasury bonds this year, up from 1 trillion yuan for 2024. Additionally, 500 billion yuan of special treasury bonds will be issued to support large State-owned commercial banks in replenishing capital.

This year's quota of special local government bonds will also be increased to 4.4 trillion yuan from a record high of 3.9 trillion yuan last year. This year, new government debt will total 11.86 trillion yuan, an increase of 2.9 trillion yuan over last year, enabling a notably higher level of spending, the report said.

In terms of monetary policy, the country will make timely cuts to the reserve requirement ratio and interest rates, the report said. Efforts will be taken to refine and develop new structural monetary policy instruments to provide stronger support for the sound development of the real estate sector and the stock market.

China, as set out in the report, also targets an increase in the consumer price index, a main gauge of inflation, around 2 percent, aimed at better balancing supply and demand through a combination of policies and reform measures so that the general price level will stay within an appropriate range.

This target is down from around 3 percent for 2024 and marks the first time that the target was set below 3 percent since China started specifying the figure in the Government Work Report in 2005.

Meanwhile, China, as laid out in the report, aims to create more than 12 million urban jobs this year, and keep the surveyed urban unemployment rate at around 5.5 percent.

To vigorously encourage foreign investment, the report said the country will open internet-related, cultural and other sectors in a well-regulated way and expand trials to open sectors such as telecommunications, medical services and education, while effectively protecting the lawful rights and interests of private enterprises and entrepreneurs in accordance with the law.

The country will effectively prevent and defuse risks in major areas, the report said, outlining steps to introduce city-specific policies on adjusting or reducing property transaction restrictions and effectively prevent debt defaults by real estate companies.

Moreover, the report said that ultra-long special treasury bonds totaling 300 billion yuan will be issued to support consumer goods trade-in programs while strategic resource reserves and market stabilization mechanisms will be strengthened in the capital market.

Tian Xuan, a deputy to the 14th NPC and head of the National Institute of Financial Research, Tsinghua University, said the GDP growth target of "around 5 percent" reflects the continuity and consistency of policies and is a goal that "we need to strive for and reach with extra effort, which can effectively inspire all people across the country to work hard together".

Janice Hu, China country head at UBS AG and chairperson of UBS Securities, said that the government is expected to prioritize "stabilizing growth" as the central task this year, emphasizing boosting domestic demand with more supportive macro policies.

"These much-anticipated measures could gradually help underpin household confidence and unleash consumption potential in the long run," Hu said, adding that UBS will continue to invest strategically in China.