President Xi Jinping on Wednesday said China was on track to meet a growth target of about 5% this year and would roll out more aggressive policies in 2026, doubling down on promises of further stimulus to boost economic growth.
In his New Year’s address broadcast by state broadcaster CCTV, President Xi said China’s gross domestic product is expected to reach 140 trillion yuan ($20 trillion) this year, with defense and science and technology in particular reaching new levels.
CCTV reported that on the same day, Xi told a New Year’s tea party for senior Chinese Communist Party officials that the country’s GDP growth rate is expected to be around 5% after an “unusual” year.
This means the economy will meet this year’s growth targets set by policymakers, supported in part by goods exports, which have shown resilience despite an escalation in the trade war with the United States.
In his New Year’s address, Mr. Xi did not reveal specific policies, but he pledged to improve the quality of the economy while maintaining “moderate growth” and reiterated his pledge of “common prosperity.”
Concerns about slowdown in second half
In his speech to the Tea Party, President Xi promised “more aggressive” macro policies, which could ease concerns about an economic slowdown in the world’s second-largest economy in the second half of 2025.
Although exports are holding up, growth momentum is slowing, weighed down by sluggish household consumption, continued deflation, and a prolonged decline in the real estate sector.
China’s trade surplus, which exceeded $1 trillion for the first time in November, could further heighten tensions with trading partners, some of whom are urging China to do more to reform its economy and reduce dependence on exports to support growth.
“Our economy is expected to advance even under pressure and has shown strong resilience and vitality,” Xi told party officials.
Mr. Xi’s policy pledge coincides with this month’s agenda-setting economic meeting, where Chinese leaders pledged to maintain an “aggressive” fiscal policy next year, including “special actions to boost consumption.”
Chinese leaders also acknowledged a “significant” imbalance between strong domestic supply and weak demand.
President Xi said China will promote effective qualitative improvement and reasonable quantitative growth of the economy while maintaining social harmony and stability.
Pursuit of technological self-sufficiency
In his New Year’s address, President Xi said that China has been able to boost its development through technological innovation, calling the country “one of the fastest-growing economies with the ability to innovate.”
The emphasis on science and technology reflects Beijing’s relentless efforts to achieve technological independence amid increasing competition from the United States, which seeks to prevent China from accessing advanced semiconductor manufacturing tools and technology.
In a televised address, Xi said China is seeing a surge in innovative achievements, including improvements to large-scale language models for artificial intelligence and new breakthroughs in independent chip development.
The country has poured national resources into building a self-sufficient domestic semiconductor supply chain, including injecting hundreds of billions of yuan into the sector through the “Big Fund” with a capital of 344 billion yuan and the third phase to be established in 2024.
Reuters reported this month that Chinese scientists are working on a prototype machine that could make cutting-edge chips, an accomplishment that Washington has spent years trying to block.
Market ends the year on a strong note
The Shanghai Composite Index rose 18% this year, marking its best year since 2019. China’s blue-chip CSI300 index has also risen 18% since the beginning of the year, the highest in five years.
The Chinese yuan this week broke above the psychologically important 7 yuan to the dollar level for the first time in two-and-a-half years, putting it on its biggest annual rise since 2020.
The central government has allocated 62.5 billion yuan in special government bonds to local governments to fund next year’s consumer goods trade-in system. The scheme aims to stimulate the economy by providing consumers with subsidies to replace household appliances.
China’s national planning authorities also announced the initial investment plan for 2026, which includes major projects with central budget funds of about 295 billion yuan.
