China's economic momentum aligns with 14th Five-Year Plan targets

In 2025, China will wrap up its 14th Five-Year Plan (2021-2025), which calls for a steady GDP expansion and more proactive efforts in the face of a complicated and challenging environment of increasing external pressure and growing internal difficulties.

The 14th Five-Year Plan has set some major indicators of economic development during the period including GDP, labor productivity rate and urbanization rate.

In terms of GDP growth target, the 14th Five-Year Plan said proposals for the average annual growth of GDP should be maintained in a reasonable range based on the situation each year.

According to the data released by National Bureau of Statistics (NBS) in January, China's GDP grew 5 percent year on year in 2024, reaching 134.9084 trillion yuan (about $18.77 trillion) and meeting the government's full-year target.

The Plan stressed that the country's annual overall labor productivity growth should be greater than its GDP growth. In 2023, labor productivity grew by 5.7 percent year on year, higher than the GDP growth of 5.2 percent, reflecting improved resource efficiency, accelerated industrial transformation, and enhanced competitiveness. With significant strides in cultivating new quality productive forces, China is also likely to reach this target in 2025.

The Plan also set the target of increasing the permanent resident population's urbanization rate to 65 percent, while China's urbanization rate of permanent residents had already reached 66.16 percent by the end of 2023, a marked rise from 53.1 percent by the end of 2012.

Last year, the government announced that the country plans to support more rural migrant workers in settling down in urban areas and aims to lift the urbanization rate of permanent residents to nearly 70 percent within five years.

When setting economic growth targets for 2025, China will consider both needs and possibilities and ensure coherence with medium and long-term planning, Yuan Da, a senior official with the country's top economic planner, National Development and Reform Commission, told a press conference in early January.

"We are full of confidence in promoting the continuous recovery of the economy in 2025, and also fully confident in completing the goals and tasks of the 14th Five-Year Plan with high quality," Yuan said.  

Based on government reports unveiled at local Two Sessions – the annual meetings of provincial legislative and political advisory bodies generally taking place before the national Two Sessions – most of China's provincial-level regions have set their local GDP growth targets for 2025 at about 5 percent or higher. These local growth targets provide a clue to the prospects of the national economy in the final year of the country's 14th Five-Year Plan.

The tone-setting Central Economic Work Conference held last December has already outlined a number of key measures and tasks for the Chinese economy in 2025. It said China would adopt a more proactive fiscal policy and a moderately loose monetary policy in 2025.

The meeting listed priorities for economic work in 2025 in nine aspects, from stimulating consumption and developing new quality productive forces to preventing and addressing risks in key areas, consolidating poverty alleviation achievements and boosting green development, which all align with the 14th Five-Year Plan.

The meeting also called for more efforts to further promote high-level opening up and secure the steady growth of foreign trade and foreign investment.

Last week China issued an action plan to stabilize foreign investment in 2025, vowing to support pilot regions in effectively implementing opening-up policies related to such areas as value-added telecommunication, biotechnology and wholly foreign-owned hospitals, providing whole-journey services for foreign-invested projects in these sectors.

China will lift restrictions on domestic loans for foreign-invested enterprises, allowing these firms to use domestic financing for equity investments, according to the plan.