‘Changes unseen in a century’: China braces for shifting global order

Beijing: China is bracing for geopolitical “changes unseen in a century” as it increases defence spending and looks to fire up its sluggish economy in the midst of a trade war with the United States.

China unveiled its budget plans in its annual work report on Wednesday, at the opening of the country’s rubber-stamp parliament, the National People’s Congress in Beijing.

Premier Li Qiang speaks during the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing.Credit: AP

Chinese Premier Li Qiang delivered the closely scrutinised report a day after US President Donald Trump doubled his tariffs on Chinese imports to 20 per cent, a decision that triggered immediate retaliation from Beijing on Tuesday.

“Changes unseen in a century are unfolding across the world at a faster pace,” the report noted, warning that the shifting geopolitics could affect China’s trade and industry, without naming specific countries involved.

Addressing the gathering of almost 3000 party delegates at the Great Hall of the People, Li announced a gross domestic product (GDP) growth target of “around 5 per cent”, maintaining the party’s expectations from last year in the face of a building trade feud with America.

But the country will record its biggest budget deficit in more than 30 years to fund its plans – 5.66 trillion yuan ($1.2 trillion).

A delegate poses for a photo ahead of the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing, China, on Wednesday.Credit: AP

“Achieving this year’s targets will not be easy, and we must make arduous efforts to meet them,” Li, the second most senior Chinese official, told the gathering, which was presided over by President Xi Jinping.

“An increasingly complex and severe external environment may exert a greater impact on China in areas such as trade, science and technology.”

The world’s second-largest economy will increase its defence spending by 7.2 per cent this year, the same percentage as last year, as Beijing continues its massive military modernisation drive amid global uncertainty and as the Trump administration upends decades of US foreign policy.

Separate budget documents submitted to the legislature showed that China expects to spend 1.78 trillion yuan ($391.6 billion) on defence this year. It is an outlay that Beijing says is below 1.5 per cent of GDP, but will be closely observed by the US and its allies, including Australia, which has expressed concerns that China is undertaking the largest military build-up since World War II.

Military delegates march ahead of the opening session of the National People’s Congress. Beijing will boost defence spending by 7.2 per cent this year. Credit: AP

The Trump administration on Wednesday called for Australia to commit to a dramatic increase in defence spending to at least 3 per cent GDP to counter China’s rise.

But with China facing major structural economic challenges, Li revealed the country’s top priority for 2025 was “vigorously boosting consumption” and stimulating domestic demand. He announced the government deficit had been increased to 5.66 trillion yuan, up from 1.6 trillion yuan over last year’s budget figure.

China is Australia’s largest trading partner and buys nearly a third of all Australian exports, so depressed domestic demand weakens appetite for Australian exports and has a drag on the broader Australian economy.

“For the first time, boosting consumption has been elevated to the top priority among 2025’s major tasks, displacing technology from its usual leading position,” technology analyst Tilly Zhang, from Gavekal Dragonomics, told Reuters.

Delegates arrive ahead of the opening session of the National People’s Congress at the Great Hall of the People in Beijing.Credit: AP

The shift in priorities signals the concern among the Communist Party leadership about the stubbornly stagnant consumer confidence following the pandemic-era property market collapse, which has hammered household wealth and dragged down the domestic economy.

“Domestically, the foundation for China’s sustained economic recovery and growth is not strong enough. Effective demand is weak, and consumption, in particular, is sluggish,” Li said.

As part of the stimulus push, Beijing will issue 1.3 trillion yuan of ultra-long special treasury bonds – an extra 300 billion yuan more than last year. It will also issue 500 billion yuan of special debt to recapitalise large state-owned commercial banks.

The National People’s Congress is a tightly scripted and staged-managed affair in which thousands of handpicked delegates attend a week-long sitting to sign off on bills and policies already approved by CCP leadership.

Together with the sitting of the country’s top political advisory body – the Chinese People’s Political Consultative Conference, which meets at the same time – the annual gathering known as the “two sessions” adds a veneer of democratic participation to the CCP’s one-party governance, which vests almost total power in Xi.

The delivery of the work report is a closely watched event that will be scrutinised by officials, analysts and academic experts in Washington and around the world for signals from Xi and party leadership about their plans and ambitions.

The report will also be unpacked in Canberra, given the dependence of Australia’s economy on China’s economic growth.

Li also adopted a tougher line on Taiwan, saying the country would “firmly advance” the push for “reunification”.

“We will firmly advance the cause of China’s reunification and work with our fellow Chinese in Taiwan to realise the glorious cause of the rejuvenation of the Chinese nation,” Li wrote in the report.

It is the second year in a row that the report has dropped the reference to the goal of “peaceful reunification” with Taiwan, which the Chinese Communist Party claims as its own territory despite never having governed the democratic island.

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