China's Ambitious Growth Target Raises Hopes for Additional Stimulus as Debt Level Reaches New Record High

Li Chen
06 Mar, 2025
Hong Kong

Stock market indexes in China and Hong Kong surged amid expectations of additional stimulus measures in support of the aggressive economic growth targets.

The Hang Seng index jumped nearly 3% and reached a 3-year high, and the benchmark index wiped out tariff-linked losses of the last two weeks. 

The CSI 300 index gained more than 1%, driven by expectations that the People's Bank of China will provide additional liquidity to the financial system, lower the reference interest rate, and facilitate lending to consumers and businesses. 

The National People's Congress' working papers suggested that the central government is targeting 5% annual economic growth in 2025.

The ambitious growth target will require higher spending by the government and raising the debt limit to a new record level.

Higher spending by the government will support the production of steel, cement, renewable energy products, and electric vehicle sales.

In the past, Chinese policymakers ridiculed the Japanese government for piling on the government debt despite the lack of economic growth. 

However, China is pursuing the same debt-fueled, government spending-driven economic growth model of Japan, as the economy struggles to maintain elevated growth levels of the past. 

Despite Beijing's economic growth target rate of 5%, China's economic growth is set to slow down to less than 3% in the next two years, driven by weaker export growth, demographic challenges, and the manufacturing industry shifting operations to other regions. 

 

China Indexes and Markets 

The Hang Seng index soared 2.6% to 24,211.62, and the broader index advanced 1.3% to 3,953.29. 

Alibaba Group Holding soared 9% to HK $141.30 after the e-commerce company released a reasoning model for artificial intelligence applications.