(Bloomberg) — Five of China’s most important provinces said they plan to grow at or above 5% this year, signs that the country will set an ambitious national target despite growing trade headwinds.
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Beijing and Shanghai — big cities classified as provinces — and Guangdong announced growth targets of “around 5%” this week, according to statements from their parliaments. Zhejiang eyes “around 5.5%” expansion and Fujian aims for 5% to 5.5%.
The wealthy provinces’ goals suggest China will seek to maintain its growth pace after the economy grew about 5% last year. In 2024, the targets of six out of the eight richest provinces were the same or lower than the national level.
The goal was seen as bullish early last year as China struggled to shake off a yearslong property downturn and lift sluggish domestic consumption. A stimulus blitz in late-September and strong exports gave the economy a shot in the arm, but the trade boost is expected to fall off in the coming months as US President-elect Donald Trump has threatened to impose steep tariffs on Chinese goods.
The provinces’ performance last year demonstrated the size of the challenge. Of the five rich regions that have announced their 2025 targets, only the Chinese capital reached the higher end of its goal in the three quarters of the year, based on the latest available data.
Guangdong, the manufacturing heartland of China, notably undershot its 5% target, with growth from January to September reaching only 3.4%. Home to distressed developers such as China Evergrande Group and Country Garden Holdings Co., the province is one of the worst hit by China’s property crisis.
Liaoning and Shaanxi on Thursday said they would aim to grow about or above 5%. Together the seven regions comprise almost 34% of China’s gross domestic product. All Chinese provinces will likely announce a growth target over the next few weeks.
The ruling Communist Party usually discloses the national goal in March, although it likely already made a decision for 2025 at a major economic work conference last month. Chinese leaders planned to set an annual growth goal of about 5%, Reuters reported last month.
Outside bigger regional economies, local authorities typically set a higher target than the national one, a trend that may stem from a desire to signal ambition to the central government. In the past three years the median provincial goal has tracked about 0.5 to 1 percentage point higher than the overall growth target, according to a Bloomberg analysis.
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The economic challenges last year proved to be more severe than expected, with the actual growth of 18 of the 31 provinces in the first three quarters at least 0.5 percentage points lower than their respective targets. Orders imposed by Beijing on some regions to rein in debt likely limited their ability to invest and slowed their expansion.
Warnings from officials in at least one major coastal province that it would struggle to hit its GDP target caught the attention of top leaders before they pivoted and announced the recent stimulus efforts, Bloomberg has reported.
Nationally, new loans declined for the first time since 2011 last year as borrowing demand from households and businesses remained subdued, data released Tuesday showed. An outpouring of Chinese government bond issuance and early signs of improvement in the housing market helped increase appetite for financing in December, although a sustained turnaround is still in doubt.
–With assistance from Douglas Huang.
(Updates with targets of Liaoning and Shaanxi.)
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