Official reports from the Ministry of Finance of China

China Sets 5% Growth Target, Plans Record 4% GDP Deficit Amid U.S. Tariff Threats

Dec 17, 2024, 05:06 AM

Chinese leaders have agreed to raise the budget deficit to 4% of gross domestic product (GDP) next year, marking the highest deficit on record, while maintaining an economic growth target of around 5% for 2025. This decision was made following high-level meetings, including the Central Economic Work Conference (CEWC), where economic guidelines for the upcoming year were outlined. The increase in the deficit, from an initial target of 3% of GDP for 2024, aims to counter the impact of an expected increase in U.S. tariffs on Chinese imports as Donald Trump prepares to return to the White House. The additional spending, amounting to about 1.3 trillion yuan ($179.4 billion), will be financed through issuing off-budget special bonds. The strategy is part of a broader effort to stimulate the economy amidst internal challenges like a severe property crisis, high local government debt, and weak consumer demand, as well as external pressures from potential U.S. tariffs.