China’s local provinces and cities set ambitious 2025 growth targets

China’s annual “Two Sessions” (the National People’s Congress and the Chinese People’s Political Consultative Conference) to announce its economic growth target will not be held until March. However, ahead of this, local Two Sessions have started taking place since 12 January.

As of 16 January, 14 of China’s 31 provinces, municipalities and regions, as well as some major cities under provincial jurisdictions, have held their local Two Sessions and released data on their 2024 economic performance and growth targets for 2025.

These local figures can serve as early indicators of national targets, suggesting that the central government’s 2025 economic growth target is also highly likely to be around 5%, similar to last year. Even if the target remains the same, achieving approximately 5% economic growth under the current unfavourable domestic and international circumstances would be ambitious, with challenges significantly exceeding those of last year. From central government to local governments, the pressure is undoubtedly mounting.

Currently, among China’s top five largest provincial economies, Guangdong and Zhejiang have held their Two Sessions and announced 2025 GDP growth targets of around 5% and 5.5%, respectively.

Jiangsu, the second-largest provincial economy, will only begin its Two Sessions on 18 January — but in the first three quarters of 2024, Jiangsu’s GDP growth reached 5.7%, with standout cities under its jurisdiction also performing well. Suzhou and Changzhou saw economic growth of around 6% in 2024, Wuxi approximately 5.8%, and Nantong as high as 6.3%.

Although Nanjing, Jiangsu’s provincial capital, had a more modest growth rate of about 4.5% in 2024, its new target for 2025 is still set at around 5%. Thus, it is likely that this economically strong province in the Yangtze River Delta will not set a target below 5% for this year.

In the three directly governed municipalities of Beijing, Shanghai and Tianjin, economic growth in 2024 was 5.2%, around 5% and 4.7% respectively. All three have set their 2025 growth targets at approximately 5%.

Major provinces and key cities setting growth targets of 5% or higher in the face of challenging conditions reflects the political sense of responsibility among local leaders to “shoulder the burden”. Furthermore, with Beijing and Shanghai, as key indicators, also setting 2025 targets at around 5%, it can be inferred that China’s national economic growth target for 2025 will likely be at a similar level.

A research report by CITIC Securities confirms that between 2016 and 2024, China’s national GDP growth target matched the average of Beijing and Shanghai’s GDP growth targets in five of those years, while the deviations in the remaining three years were all within 0.5 percentage points.

Amid a range of adverse domestic and international conditions — a sluggish real estate market, low investor and consumer confidence, intense competition among enterprises, continued US technological restrictions, the potential for another US-China trade war upon Trump’s return to power, and obstacles to exporting new energy vehicles to Europe — China’s economic outlook is even more clouded than last year, and it will not be easy to maintain the same growth rate.

To achieve China’s long-term goal for 2035 — which aims to elevate per capita GDP to the level of moderately developed countries — an annual growth rate of 5% is not strictly necessary; a rate of approximately 4.8% would suffice.

However, setting relatively higher growth targets is particularly crucial at this moment. For one, setting more ambitious goals will encourage the whole country to rise to the challenges. Next, it can also help boost confidence to a certain extent, as it sends a clear message that the government prioritises economic growth.

In fact, over the past few years, Chinese private enterprises and international investors alike have questioned if the Chinese government has sacrificed economic growth in its pursuit of other goals, such as security and environmental protection. The outside world needs to see the Chinese authorities demonstrate a stronger sense of urgency regarding GDP growth. When other signals are ambiguous, the GDP growth target serves as a political statement, reflecting the authorities’ level of commitment to growth.

Of course, achieving the aforementioned goals will be an uphill battle. At the end of December 2024, the revised projection is only 4.5%, although the World Bank raised China’s growth forecast for 2025. Similarly, a Reuters poll of 64 economists also put the median forecast for China’s 2025 economic growth at 4.5%.

Based on the information disclosed at the provincial-level two sessions, many other provinces and municipalities — apart from major economically robust cities and provinces shouldering significant responsibilities — have cautiously lowered their growth targets, directly or indirectly. For example, Hubei province adjusted its target from 6% last year to around 6% this year and Fujian adjusted targets from around 5.5% to between 5.0% and 5.5%, while striving for better results based on actual conditions. 

Meanwhile, Hunan lowered its growth target from around 6% to around 5.5%, Hebei lowered theirs from 5.5% to above 5%, and Shaanxi from around 5.5% to around 5%. Clearly, all provinces recognise the challenges that lie ahead. Guangdong’s growth for 2024 is expected to be only 3.2%, reflecting the challenges that lie ahead for each province. On the other hand, Hainan’s growth target has been significantly lowered from 8% to 6%, highlighting the difficulties in developing a free trade port. 

If decisive action is not taken this year to turn the tide and stabilise the situation, China’s economy may decline further next year, eventually affecting the achievement of its long-term goals for 2035. Also, although China’s economic growth rate is already impressive among major economies, public sentiment remains negative. There is a widespread perception of economic sluggishness, with many feeling they are working harder but receiving less. This atmosphere is likely to impact social stability.

On the bright side, increased pressure could motivate China to concentrate more on economic development. There are still many options available, depending on whether efforts are directed efficiently. For example, beyond exploring various new high-tech avenues, it is even more important to provide more space for the private sector and to effectively increase household incomes.

Externally, will China seek to better manage its relations with the West, particularly by seizing the opportunity presented by Trump’s return to power to ease tensions in China-US relations? In this challenging new year, can the country turn crisis into opportunity, or at least strive to navigate through them safely? We shall wait and see.

This article was first published in Lianhe Zaobao as “中国地方省市雄心勃勃的2025年增长目标”.

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