The Guardian-Xi says Chinas economy on course to expand by 5 despite Trump concerns

Xi Jinping delivers a New Year message to China.

China’s economy is on course to expand by 5% in 2025, according to president Xi Jinping, meeting official growth targets and rebutting concerns that Donald Trump’s incoming US administration will harm Beijing’s prospects in the new year.

Using his annual address to the nation, Xi sought to allay fears that the world’s second-largest economy would falter over the next 12 months after the government battled to prevent a slide towards recession during 2024.

Xi said China’s economy was “overall stable and progressing,” in a speech published by the official Xinhua news agency. He said risks in key areas were effectively addressed, while employment and prices remained steady.

The speech followed the December meeting of the Communist party politburo which was widely viewed as signalling the strongest commitment to economic stimulus in a decade, marking a shift towards more aggressive subsidies and cuts to the cost of borrowing.

“The current economic operation faces some new situations, challenges from the uncertainty of the external environment and pressure of transformation from old drivers of growth into new ones, but these can be overcome through hard work,” Xi said.

Trump is preparing to impose high tariffs on Chinese imports to punish what the incoming US president believes are unfair subsidies for Chinese industrial products.

China is expected to respond with restrictions on US companies operating inside China, including Elon Musk’s Tesla car company. Musk became a key adviser to Trump during his presidential campaign.

A precise growth target for 2025 will not be available until next month, but officials have flagged that 5% will be the expected outcome over the next year.

A series of stimulus measures since September 2024 are likely to have kept growth from falling below 4.8% in the last year. However, economists at Bloomberg have estimated a growth rate of only 4.5% for 2025, well below the 5% expected level and significantly lower than the 6% average reached before the pandemic.

Growth rates could be even lower than official figures suggest. The Chinese authorities have faced persistent accusations of massaging economic data to suit official forecasts, especially during the pandemic when Beijing ordered one of the most severe lockdowns of any major economy. Many analysts said the move depressed consumer spending and business activity by more than was shown in official data.

Senior policymakers are known to want China’s stock markets to grow at a stronger pace and more consistently to support wealth creation and private sector investment. Share prices improved in 2024 despite a dip on the last day, but the modest rise over the last year followed an unprecedented three-year decline.

Among the stimulus measures is a boost to public sector pay. It is understood the first significant pay rise for civil servants in several years was awarded before Christmas, as policymakers try to boost morale and spur spending.

According to a Bloomberg report, the basic salaries of many government employees were bolstered by at least 500 yuan ($68.51) a month, backdated to July.

China’s central bank is expected to make it easier for households and businesses to borrow after a slump in the housing market caused many property firms to go bust.

Xi also praised Russia and said the two countries would forward “hand in hand” on the right path, months after the two countries struck a “new era strategic partnership” on key issues.

Xi and Vladimir Putin agreed in May to deepen bilateral ties and cooperate on areas of mutual interest such as Taiwan, Ukraine and with respect to mutual rival the US.

Russia’s state-run RIA news agency also quoted Moscow’s ambassador to Beijing as saying last Friday that Xi will visit Russia in 2025.