Washington: Despite escalating trade tensions with the United States, China has set ambitious economic and defense goals for 2025, signaling a strong push for stability and modernization. The Chinese government has reaffirmed its commitment to domestic demand as a primary economic driver while maintaining a 5% GDP growth target and increasing its defense budget by 7.2% amid rising regional security concerns.
Economic Growth and Challenges
Chinese Premier Li Qiang presented the government’s annual work report on Wednesday, keeping the 2025 economic growth target at around 5%, consistent with the previous year. Li acknowledged that China faced a “complex and severe situation with increasing external pressure and internal difficulties” over the past year. However, he emphasized that the economy remained “generally stable, with steady progress,” attributing it to the leadership of the Communist Party of China (CPC) under President Xi Jinping.
Economic experts have noted that China’s growth last year was largely driven by strong foreign demand, particularly in manufacturing and exports. However, analysts warn that the ongoing U.S.-China tariff dispute could reduce foreign demand, while domestic economic sentiment remains fragile. Lynn Song, the chief economist for Greater China, highlighted these concerns, noting that achieving this year’s 5% growth target will be more challenging due to external and internal pressures.
Increased Defense Spending Amid Regional Tensions
According to China’s Ministry of Finance, the country plans to allocate over USD 245.6 billion for defense in 2025, marking a 7.2% increase from the previous year. This spending surge represents one of the largest defense budget increases in recent memory.
Experts attribute the rise in military expenditure to China’s strategic shift towards bolstering air and naval combat capabilities, as the country seeks to transform from a land-centric power to a maritime force. Su Ziyun, director of the Institute of Defense Strategy and Resources at Taiwan’s Institute for National Defense and Security, noted that China is investing heavily in its naval strength to assert influence in the Indo-Pacific region.
Military Exercises and Regional Implications
Recent military exercises conducted in the Taiwan Strait, as well as in waters near Vietnam, Australia, and New Zealand, demonstrate China’s increasing focus on maritime operations. The heightened military activities come at a time of growing tensions with the United States and its allies over Taiwan, the South China Sea, and broader regional security issues.
China’s dual strategy of economic stabilization and military expansion reflects its determination to navigate geopolitical challenges while strengthening its global standing. As the trade war with the U.S. continues to evolve, China’s ability to balance economic growth with national security priorities will be closely watched by international observers.
