China raises military spending by 7% and sends a response to Trump

BeijingIn the middle of the pressure from a trade war with the United States, Beijing is showing confidence and offering stable recipes to overcome the slowdown. Premier Li Qiang opened the National People's Congress on Wednesday by presenting the report on the work of the government. A document that outlines plans to stimulate the economy, promote high-tech industries and increase social protection. Without forgetting, as always, to promote reunification with Taiwan.

With the usual pomp of communist liturgy, the prime minister has been presenting the data in the Great Hall of the People before the top brass of the central committee, thousands of delegates and a large number of guests from embassies. As always, the speech has been followed with total attention and there has been no lack of applause at the end of each point, especially long when Li Qiang spoke of Taiwan and measures for the rural world.

Li Qiang has also announced that China will increase military spending with restraint despite international turbulence. He will apply a 7.2% increase in the defense budget. This is the same percentage as in the previous two years. The objective remains the modernization of the army and the achievement of a first-class combat force by 2050.

China has the second highest defense budget in the world, behind the United States. In response to Donald Trump's proposal a few weeks ago to meet with China and Russia to cut military spending and nuclear weapons, Xi Jinping replied that it was Moscow and Washington. those who had to start working.

China is in constant conflict with its neighbours over control of the waters in the South China Sea, rich in natural resources, although its main military challenge would be a possible annexation by force of Taiwan.

Li Qiang has repeated that Beijing firmly opposes the separatist activities of the Taiwanese government, and has assured in his speech that China "will firmly advance the cause of reunification". In fact, the army has continuously increased the pressure with military exercises around the island. But in addition to the threat, Xi Jinping's government is trying to seduce the Taiwanese with cultural and especially economic exchanges between the two sides of the strait.

Special mention has been made of the support for the development of high-tech industries, and especially artificial intelligence, as a driver of growth.

The objectives outlined by Li Qiang are intended to send a message of confidence to the economy of the Asian giant. Beijing is positioning itself as a stable power that does not tremble in the face of the geopolitical tensions unleashed by Donald Trump. The prime minister, despite recognizing the impact of Washington's unilateral decisions, stressed that China has a "vast market, abundant human resources and effective governance mechanisms in terms of long-term planning," a whole series of advantages in times of crisis.

The Chinese embassy in the United States has shown even more firmness through its official X account: "If what the US wants is war, whether it is a tariff war, a trade war or any other type of war, we are prepared to fight to the end."

Economic growth forecast stable despite trade war

Beijing's economic targets for 2025 are very similar to those of last year, which shows great confidence or optimism, since it cannot be said that the Chinese economy is currently in a strong position. During the last fiscal year, the government had to deal with the real estate crisis, weak domestic consumption and rising unemployment. Thanks to the final sprint of exports in the last quarter, the growth targets were achieved.

In this situation, many analysts consider that setting a GDP growth target of around 5% for this year represents a challenge. The trade war with the United States, which has only just begun and has already led to a 20% increase in tariffs on Chinese products, will increase the difficulties.

The World Bank has been more cautious and predicts that the Asian giant's economy will expand by 4.5% in 2025, leaving the International Monetary Fund at 4.6%.

Aware of the risks, the government plans to boost fiscal measures to revive the economy. The prime minister has announced that a record fiscal deficit of around 4% of GDP will be allowed to protect against tariffs. Long-term government bonds worth 168.549 billion euros are planned to be issued to finance state strategies, and a special bond issue worth 570.663 billion euros will also be carried out for local governments to deal with the property crisis.

Beijing is committed to creating 12 million new urban jobs and keeping the unemployment rate at around 5.5%. These are the same goals as last year, but now the economy is weaker and extra efforts would be needed to achieve them.

Li Qiang also said that promoting domestic demand is the priority to achieve a healthy economy. To encourage consumption, one of the star measures of 2024 will remain in force, a sort of Renove plan to finance the purchase of household appliances and electronics with a budget of 38.905 billion euros.

A series of initiatives have also been announced to increase the social umbrella, ranging from the commitment to increase nursery places and aid to families with children to strengthening care for the elderly. Social security benefits for rural migrants will also be expanded, although without equaling them with legal residents in cities.