China's National People's Congress Focuses on AI and Economic Challenges

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On Tue, 4 Mar, 4:04 PM UTC

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China's annual parliamentary session highlights AI development and economic stabilization as key priorities, amid challenges including sluggish consumption and trade tensions with the US.

China's Economic Targets and Challenges

China's annual National People's Congress (NPC) commenced with Premier Li Qiang presenting the government's work report, setting an economic growth target of "around 5%" for 2025 12. This target aligns with previous years, despite the International Monetary Fund's projection of a slowdown to 4.6% growth 1. The Chinese economy faces several challenges, including sluggish consumption, a property market slump, and ballooning government debt 23.

To address these issues, the government plans to increase the fiscal deficit ratio from 3% to 4% and issue 300 billion yuan ($41.3 billion) in ultra-long special treasury bonds 14. These measures aim to boost consumption and finance consumer goods trade-in programs 1. Premier Li emphasized the need to make "domestic demand the main engine and anchor of economic growth" 14.

Focus on Artificial Intelligence and Technological Self-Reliance

A significant portion of the NPC's agenda is dedicated to harnessing the power of artificial intelligence (AI) and achieving technological self-reliance 23. This focus comes in response to U.S. efforts to limit China's access to advanced technologies, particularly semiconductors 1. The government has pledged support for research and development in "core technology in key fields," with a particular interest in expanding AI applications in smart manufacturing, new-energy vehicles, and robotics 13.

Lou Qinjian, spokesman for the NPC, highlighted China's breakthrough DeepSeek AI model as an example of the country's "innovative and inclusive approach to technology" 25. This emphasis on AI and technological advancement aligns with President Xi Jinping's goal of reducing dependence on foreign technologies.

Trade Tensions and External Challenges

The NPC takes place against a backdrop of increasing trade tensions with the United States. China recently announced additional tariffs of up to 15% on U.S. farm products, including chicken, pork, soy, and beef, in retaliation for increased U.S. tariffs on Chinese goods 23. These trade frictions could potentially reduce China's economic growth by up to 1.1 percentage points, according to Maybank Investment Banking Group 1.

Premier Li acknowledged the "increasingly complex and severe external environment," citing rising "tariff barriers" and geopolitical tensions as significant challenges 14. These external pressures compound the domestic economic difficulties China faces.

Support for Private Enterprises and Defense Budget

The NPC is set to review legislation aimed at improving market conditions for private enterprises, signaling the government's support for the private sector 25. This move follows President Xi Jinping's recent meeting with business leaders, including Alibaba founder Jack Ma and Huawei CEO Ren Zhengfei 23.

China also announced a 7.2% increase in its defense budget for 2025, maintaining the same growth rate as the previous year 14. This increase reinforces China's position as the holder of the world's second-highest military budget, behind only the United States 1.

Taiwan and Territorial Claims

The government work report reiterated Beijing's stance on Taiwan, reaffirming its ambition to "resolve the Taiwan question" and opposing any separatist activities or external interference in cross-strait relations 14. This position underscores China's continued focus on asserting its territorial claims and challenging U.S. alliances in Asia.

As the NPC progresses, the world will be watching closely to see how China addresses its economic challenges, advances its AI capabilities, and navigates the complex geopolitical landscape in the coming year.

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