By Brian Swint

China has come out swinging after President Donald Trump increased tariffs on goods from the world's second biggest economy even further.

Beyond its response to the new taxes, which have been more targeted than the U.S. measures, policymakers at the National People's Congress set new targets for economic growth and inflation this year that could be tough to reach.

That's perhaps been done partly for positioning in future tariff negotiations. But it also signals a willingness to go further to get the economy back on track after a sluggish recovery from the Covid-19 pandemic.

In any case, a more forceful government intervention will make it more likely that the economy does well in 2025. That might be embarrassing for Trump, who has long accused China of becoming wealthy at America's expense.

China's leaders set a goal of 5% expansion this year. That's the same as last year, but that target was only barely met at the last minute as the economy is still dealing with the fallout of a property market slump and decreased world trade. It also increased plans for deficit spending and lowered its inflation goal to 2% from 3%. Officials encouraged local governments to encourage consumption.

"The ambitious growth target is more of a strategic attempt to project strength for upcoming trade negotiations with the U.S.," said Alex Loo, a strategist at TD Securities. "Investors may be under-appreciating the resolve of officials to boost the property sector, which is an upside risk to China's economy this year."

Chinese stocks got a boost after the announcement. The Shanghai Composite Index rose 0.5% Wednesday, while the Hang Seng in Hong Kong added 2.8%. Internet retailer Alibaba's American depositary receipts climbed 2.6% in premarket trading, and technology company Baidu's were up 2.8%. Electric vehicle maker BYD also gained 3% in Hong Kong.

Write to Brian Swint at brian.swint@barrons.com

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March 05, 2025 07:29 ET (12:29 GMT)

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