The Chinese government unveiled an annual economic growth target of “around 5%” on Wednesday, despite the possible negative impact of a looming trade war with the United States, and pledged to address what it called “sluggish” consumer spending at home. The target was announced at the opening session of the annual meeting of China’s legislature. It’s the same as for the last two years but will likely be more difficult to achieve because of the new, higher U.S. tariffs on Chinese products and other economic headwinds. The use of “around” gives the government some room if growth falls short. The target signals the government’s intention to try to stabilize growth in challenging economic times but hold back on more dramatic action that some economists say is needed to supercharge it. The government also said in a draft budget released Wednesday that defense spending would rise 7.2% this year to 1.78 trillion yuan ($245 billion), second only to the United States. It released the growth target in a separate report, parts of which were presented to the nearly 3,000 members of the National People’s Congress by Premier Li Qiang. It acknowledged both international and domestic challenges. “An increasingly complex and severe external environment may exert a greater impact on China in areas such as trade, science, and technology,” the report said, without specifics. “Unilateralism and protectionism are on the rise.” It added: “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.” The International Monetary Fund has projected that China’s economy will grow 4.6% this year, down from 5% in 2024, according to Chinese government statistics. The new report placed more emphasis on reviving domestic demand and consumption than last year’s, echoing a shift by the ruling Communist Party at meetings in December. It said the government should “make domestic demand the main engine and anchor of economic growth.” The report added that “achieving this year’s targets will not be easy, and we must make arduous efforts to meet them.” Across-the-board 20% tariffs imposed this week on Chinese products by U.S. President Donald Trump pose the latest threat to an economy already weighed down by a prolonged real estate slump and sluggish consumer spending and private business investment. The tariffs could crimp sales to one of China’s major export markets, making the need to boost domestic demand more urgent. The new report offered some details on the party’s plans for a “more proactive fiscal policy,” including a rise in the government budget deficit from 3% to 4% of GDP, or the size of the overall economy. It also reiterated the party’s announcement in December that the central bank would shift its monetary policy from “prudent” to “moderately loose” for the first time in more than a decade. The government will issue 1.3 trillion yuan ($180 billion) in ultra-long term bonds, up from 1 trillion yuan last year, the report said. Of that, 300 billion yuan would go toward a program launched last year that offers rebates to consumers who trade in automobiles or appliances for new ones, doubling central government support for the program. Economists expressed doubts over whether the policies will do enough, noting that the government reduced its inflation target to 2% from 3% last […]