China’s 2025 Goal: Balancing Economic Development With Social Welfare

In mid-March, China concluded its Two Sessions – the annual meetings of China’s top legislative body and its top political advisory body to discuss and approve major policies and agendas, though in a rubber-stamp manner.  2025 also marks the final year of China’s 14th Five Year Plan, which included several relatively ambitious goals given China’s meager economic performance in recent years.

At the Two Sessions, Premier Li Qiang announced a GDP growth target of 5 percent. The targeted urban unemployment rate is 5.5 percent, with plans to create over 12 million new urban jobs. Consumer prices are projected to increase by about 2 percent. Li pledged that residents’ income growth will align with economic growth, ensuring that the benefits of development are more widely shared. Grain output is estimated to reach around 700 million tons. Meanwhile, energy consumption per unit of GDP will decrease by about 3 percent, continuing the transition to more sustainable development.

China’s priority remains economic recovery and stimulation, but no new tricks stand out in this year’s policy apparatus. Not dissimilar to previous years, the Two Sessions emphasized increasing domestic consumption, including a plan to issue 300 billion yuan – double the amount in 2024 – in ultra-long-term government bonds to support trade-in and replacement of consumer goods. This policy might moderately stimulate more purchases of domestically produced home electronics and EVs.

The buzzword coined last year, “new productive forces” (新质生产力), recurred as a top priority. It generally refers to expanding production in new technological areas that could bring back China’s double-digit growth, contributing to GDP and employment goals. These areas include technologies like embodied artificial intelligence, 6G, deepsea mining, quantum, biomanufacturing, the “low-altitude economy” (think drones and flying cars), and commercial aviation. The goal is not only to invent cutting-edge technology, but also in the process of doing so, train new talents and expand industrial production.

Given Xi Jinping’s recent meetings with leading tech firms and startups, including DeepSeek, it is clear that Beijing has high expectations for applied AI in all aspects, especially when it comes to private sector actors. Leading manufactures, including Xiaomi and Haier, were quoted in the government’s official report at the Two Sessions with pledges to upgrade their production with AI.

Relatedly, improving the education sector is one highlight of this year’s policy priorities. The education system in China remains uneven, while largely meritocratic due to the college-entrance exam system in place. This year, China pledged to address the regional educational inequalities in primary and secondary education, and especially to enhance the quality of high schools in townships. China plans to further expand special education, vocational colleges for blue-collar work, and diversified skill trainings as alternative solutions to the unemployment issue. Chinese young people see a traditional four-year college as a “single-plank bridge” that they must cross. Currently there is social stigma associated with not attending traditional college, which remains an obstacle to individuals who might otherwise switch to alternative paths.

Young people were a main focus of this round of policy solutions. Not only have they been having trouble finding jobs amid the involution (内卷), but they also are increasingly resistant to the idea of marriage and having children. To address this, the Two Sessions representatives proposed to give grants and child benefits to young couples willing to reproduce. Several proposals centered on subsiding “good houses” for young people, meaning homes with clean air, good lighting, and community facilities.

On the other end of the demographic scale are China’s senior citizens. By 2024, China was home to 310 million people over the age of 60. This elderly subpopulation demands comprehensive support systems to address their healthcare, social security, and daily living needs. This year, China acknowledged the need to build community-based and home-based elderly care, including training family members to provide care and creating an online network to order care workers’ service at home. It further wants to facilitate healthcare related technology and smart products.

By the end of 2021, a total of 1.03 billion people nationwide were enrolled in basic pension insurance, and 1.36 billion people were covered by basic medical insurance, with a participation rate at over 95 percent, essentially achieving universal health insurance coverage. Currently, China’s community-based healthcare service and clinics play a similar role as a “family doctor” in the North American context, and 90 percent of people can get to a nearby clinic within just 15 minutes.

In comparison, elder care centers, professional caregivers, and long-term care insurance have a low penetration rate compared to Western standards. Elder care insurance and nursing homes are not popular choices in China both due to cultural norms and lack of resources. In late 2023, a survey conducted by McKinsey showed that 70 percent of people had some degree of concern about how to pay for elder care, while 80 percent had no clear retirement plan due to financial uncertainty.

The 2025 Two Sessions reflected China’s attempt to balance economic recovery with social stability, prioritizing innovation and social welfare amid demographic challenges. How these policies will be implemented, and to what effect, is the question.