Caixin Weekly | Local Governments’ Economic Strategies for 2025 (AI Translation)

财新周刊｜2025地方谋经济

In January 2025, Chinese provinces reported their economic results for 2024. Out of all regions, 22 provinces exceeded or matched the national average GDP growth rate of 5%. Tibet and Xinjiang led with growth rates of 6.3% and 6.1%, respectively, while major economy provinces like Jiangsu, Shandong, Sichuan, Zhejiang, and Henan achieved growth between 5.1% and 5.8%. In contrast, nine provinces, including Guangdong (3.5%) and Hainan (3.7%), reported growth below the national average. Due to increased external uncertainties and ongoing domestic challenges, local governments adjusted their 2025 economic targets accordingly during annual legislative meetings. 15 provinces lowered their GDP growth targets, whereas only Tianjin increased its goal. Notably, 16 provinces set 2025 growth targets higher than their 2024 outcomes, indicating a strong desire to stabilize growth. Most provinces prioritized expanding domestic demand for 2025, with unique growth drivers emerging based on local conditions. Many provinces set retail sales growth targets above those for GDP and fixed-asset investment, especially in central and western regions where investment targets remain high. Consumption policies now focus not only on upgrading consumer goods but also on boosting incomes and reducing burdens for low- and middle-income groups, as well as improving wage growth mechanisms to enhance consumer capability and willingness[para. 1].

Detailed provincial targets for 2025 revealed that, except for Qinghai (set at 4.5%), 30 provinces aimed for 5% or higher GDP growth. Tibet was the most ambitious, targeting “7% and striving for 8%.” Hainan, despite reducing its target from 8% to above 6%, still maintained a relatively high bar. Several provinces like Chongqing, Inner Mongolia, Hubei, and Xinjiang set around 6%. Fourteen economically significant provinces including Shandong, Jiangsu, Beijing, and Shanghai targeted around 5%. Only Tianjin increased its target (from 4.5% to 5%). Major economic powerhouses, accounting for over 60% of national GDP and industrial output, mainly kept steady targets, with Sichuan, Hunan, and Fujian making small downward adjustments. Guangdong, the largest provincial economy, set a challenging 5% target for 2025 after growing by only 3.5% in 2024, emphasizing its solid economic foundation and strategic positioning. Hubei’s aggressive 6% target reflects its commitment to undertaking a leading economic role. Tianjin adjusted its focus toward regional integration and market-driven cooperation. Additionally, some provinces like Jiangsu and Anhui introduced innovation-based indicators into their growth targets, while 27 provinces trimmed their CPI inflation targets to around 2% for 2025, reflecting continued low consumer price growth[para. 2][para. 3][para. 4].

Focusing on demand, provincial strategies for 2025 highlight “all-round expansion of domestic demand,” a shift toward boosting consumption as the main growth driver, especially as external uncertainties rise and investment loses relative dominance. Select provinces such as Hainan aim for retail sales growth notably above GDP and investment targets. Many are prioritizing consumer upgrades like “trade-in” programs for goods and emphasizing resident income growth, particularly raising the incomes of rural and low-income citizens. Several provinces set specific targets for household income growth to outpace GDP growth. In terms of investment, economic giants like Guangdong and Zhejiang refrained from disclosing specific fixed-asset investment targets, instead focusing on upgrading investment quality and efficiency. Meanwhile, less developed regions continue to rely on significant investment goals, encouraged by central government initiatives and support for infrastructure projects[para. 5][para. 6].

In line with comprehensive reforms, over half of the provinces referenced “zero-based budgeting” in their 2025 government work reports as part of ongoing fiscal reforms—this budgeting system disregards previous allocations and builds budgets from scratch based on actual needs. Provinces such as Anhui and Zhejiang are deepening zero-based budgeting to enhance fiscal efficiency and align spending with strategic priorities. Improvements in the business environment were highlighted, with actions to eliminate barriers, support private sector development, and resolve delayed payments to enterprises. Leading provinces like Fujian and Zhejiang took legislative steps to promote fair competition and resolve outstanding business debts, emphasizing government credibility and legal responsibility. Additionally, nationally significant reform areas like Hainan’s Free Trade Port and Shanghai’s integrated reform zones are moving ahead with further liberalization measures and institutional innovation, aiming to align with high-standard international trade rules and create model environments for openness, legal certainty, and business facilitation[para. 7][para. 8][para. 9].