China's National People's Congress 2025

In today’s issue of MERICS China Essentials, we focus on the National People’s Congress (NPC) which held its annual legislative session in Beijing from March 5 to 11.

Beijing is relying on local governments to make consumption kick in

China’s Premier Li Qiang used the Government Work Report to the NPC to place a new emphasis on boosting the country’s domestic consumption. This increases the pressure on local governments – which are responsible for 85 percent of public spending – to restore consumer confidence through social security and welfare provision. Katja Drinhausen, Head of Program Politics and Society at MERICS, argues: “The lack of revenue sources for local governments to fund their to-dos means that boosting domestic consumption remains a long-term endeavor.” Read more

Beijing bets its seed investment can mobilize private capital for future technologies

The press conference on China’s short-term economic development that traditionally flanks the NPC focused on long-term innovation this year. Its highlight was the launch of a Government Guidance Fund to channel one trillion CNY (127 billion EUR) into emerging technologies. Jeroen Groenewegen-Lau , Head of Program Science, Technology and Innovation at MERICS, argues: “The success of DeepSeek has bolstered Beijing’s appetite for betting big on future technologies. Although presented as spurring tech start-ups and the private sector, the new guidance fund may actually push out private investors and further boost the advance of the state at the cost of the private.” Read more

China’s trade retaliation punishes adversaries and spares potential partners

Beijing used the NPC to reaffirm its commitment to “autonomous opening up”, or integrating into the global economy on its own terms and for its own reasons. But beyond those few days in March, China is expanding and refining a new toolkit to respond to trade-restrictive measures by the US and other governments – although it is not used equally against all players. MERICS Lead Analyst Jacob Gunter notes that China seems to distinguish between its rivals, actors it hopes to keep neutral, and those that are actual or potential partners: “China is treating the EU differently than the US, but a lack of retaliation does not mean that Beijing will also solve the myriad problems Europe faces from the Chinese economic model.” Read more

Beijing adopts a tougher tone towards the Trump administration

Chinese Foreign Minister Wang Yi used a press conference during the NPC to sharpen Beijing’s tone towards Washington. He criticized the US for bringing chaos to the international order and accused the Trump administration of being “two-faced” for trailing the idea of a “deal” between the US and China but failing to build mutual trust. MERICS Analyst Claus Soong says: “Beijing’s increasingly assertive rhetoric appears to signal that it is increasingly prepared to take a tougher position in trade and other areas. The 'two-faced' accusation highlights Beijing’s deep mistrust of Trump, suggesting that greater assurances from the US will be needed to make any deal offer acceptable to Beijing." Read more

Continue reading this issue of MERICS China Essentials here.