Reflecting on China’s 2025 Two Sessions, the annual gatherings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), held in Beijing from 4–11 March 2025, the policy roadmap unveiled during the meetings underscored a determined, albeit challenging, push to meet the nation’s economic ambitions.
Against a backdrop of sluggish global demand, demographic pressures, and technological competition with the West, the sessions crystallised a multi-pronged strategy to achieve the coveted 5 percent GDP growth target for 2025, a figure seen as critical for stabilising employment, boosting investor confidence, and fulfilling the closing milestones of the 14th Five-Year Plan (2021–2025). While the headline growth goal mirrored 2024’s target, the granular policy shifts revealed a sharper focus on overcoming structural bottlenecks, from innovation gaps to an ageing population, which threaten long-term prosperity.
A cornerstone of the discussions was China’s intensified commitment to technological self-reliance, a theme elevated by ongoing US-led export controls on advanced semiconductors and AI-related hardware. The government announced a 7.2 percent year-on-year rise in public funding for science and technology, amounting to ¥1.2 trillion (£132 billion), with ¥450 billion (£49.5 billion) earmarked for semiconductor manufacturing and quantum computing research.
This builds on China’s 2023 R&D expenditure of ¥3.3 trillion (£363 billion), which represented 2.64 percent of GDP, but still lagged behind the OECD average of 2.74 percent. The 2025 budget aims to push R&D spending beyond three percent of GDP, with private firms like SMIC and Huawei incentivised through tax breaks to co-invest in “bottleneck” sectors. Officials also confirmed the launch of a third national semiconductor fund, targeting £22 billion in public-private financing to localise production of 7-nanometer chips by late 2025, a tacit acknowledgment of the hurdles imposed by US sanctions.
Simultaneously, the sessions doubled down on revitalising domestic consumption, a priority given the fragility of household spending, which grew by just 4.1 percent in 2024, well below pre-pandemic averages. A £58 billion stimulus package was approved, including direct subsidies for rural households purchasing electric vehicles (EV), VAT cuts for small businesses, and vouchers for green appliances like solar panels and energy-efficient HVAC systems. These measures dovetail with ambitious industrial targets, including a 20 percent annual increase in EV output to 10 million units by December 2025, which would solidify China’s 60 percent share of global EV production.
Infrastructure, long a lever for growth, retained prominence, with ¥4 trillion (£440 billion) allocated to projects ranging from the expansion of the Chengdu-Chongqing high-speed rail corridor to the rollout of 5G base stations in rural counties. The latter aims to connect 98 percent of villages to high-speed internet by 2025, narrowing the digital divide and supporting e-commerce in regions where per capita disposable income remains 40 percent below urban levels. Notably, ¥600 billion (£66 billion) was pledged to smart city initiatives, including AI-driven traffic management systems in 50 major cities and the integration of renewables into urban power grids, a move aligned with China’s “dual carbon” goals.
On sustainability, the 2025 targets are nothing short of transformative: renewable energy capacity is set to reach 1,200 gigawatts (GW), including 600 GW from solar and 430 GW from wind, effectively doubling 2020 levels. To achieve this, the state grid will invest ¥1.8 trillion (£198 billion) in ultra-high-voltage transmission lines to channel wind and solar power from western provinces to eastern industrial hubs.
Demographic reforms emerged as perhaps the most socially consequential focus. With China’s population declining for a third consecutive year in 2024 and the workforce shrinking by 4 million annually, policymakers unveiled a sweeping package to raise the fertility rate from 1.09 in 2022 to 1.4 by 2025, a goal many demographers deem optimistic.
Monthly childcare subsidies were tripled to ¥1,000 (£110) per child in 30 pilot cities, while paternity leave was extended to 30 days nationwide. Pension reforms, including a 10 percent increase in rural payouts and a gradual rise in the retirement age to 65, aim to alleviate the fiscal strain of a greying population, which is projected to see 300 million citizens over 60 by 2035.
Externally, the government signalled a pragmatic approach to trade, raising export tax rebates by 10 percent for advanced manufacturing sectors like robotics and aerospace, a bid to offset weakening demand in key markets like the EU, where Chinese EV imports face potential tariffs. This comes as China’s share of global exports dipped to 12.8 percent in 2024, down from 14.7 percent in 2022, according to WTO data. Meanwhile, the yuan’s controlled depreciation to 7.3 against the dollar in early 2025 drew scrutiny, with critics alleging a deliberate boost to export competitiveness.
In essence, the 2025 Two Sessions revealed a balancing act. Leveraging state-driven investment in technology and infrastructure to prop up growth, while cautiously navigating global headwinds and internal vulnerabilities. Success hinges on execution, and on whether innovation and green transitions can outpace the drag of demographics and debt. As Premier Li Qiang noted in his closing speech, “The targets are within reach, but the climb grows steeper.” For China, 2025 will test whether its model of reform can adapt to an era of unparalleled complexity.
