Xi’s Tech Meetup: A Bullish Sign for China’s Economy?

China’s Economic Challenges: A Critical Backdrop

China’s economy has been grappling with several obstacles, including the aftermath of the COVID-19 pandemic, a struggling real estate sector, and increasing fiscal pressures on local governments. According to the Rhodium Group, the country’s GDP growth in 2024 was estimated between 2.4% and 2.8%, significantly lower than the official claim of nearly 5%. These figures highlight the difficulty China faces in sustaining economic momentum.

In this context, the recent tech-focused meeting chaired by President Xi Jinping has generated considerable interest among market analysts. Could this signal a renewed commitment to technological innovation and economic revitalization?

The Push for Technological Self-Sufficiency

At the core of China’s economic strategy is the “Made in China 2025” initiative, which aims to transition the country into a high-tech manufacturing powerhouse. Launched in 2015, this ambitious plan is designed to boost domestic technological capabilities and reduce dependency on foreign technologies. Key industries targeted include:

By 2025, China seeks to achieve 70% self-sufficiency in these strategic industries, with long-term ambitions of leading global markets by 2049. The recent tech meetup reiterates China’s commitment to accelerating progress in these areas, reflecting a strategic push to fortify its economy amid global uncertainties.

Market Experts’ Views on the Economic Impact

Investment in Technology and GDP Growth

Prominent analysts see increased investment in China’s tech sector as a potential catalyst for economic growth. According to the Rhodium Group, investment could expand by 2-3% in real terms, adding approximately 0.5 to 1.0 percentage points to GDP growth in 2025. This signals a possible stabilization in economic activity, even as structural issues persist.

Government Fiscal Policies and Support

To further stimulate growth, China’s government is expected to intensify fiscal measures, including:

While these efforts may ease funding pressures in key sectors, their overall effectiveness could be limited if fiscal revenues remain weak.

Consumption and Trade Outlook

Despite efforts to support household consumption, several challenges persist:

On the trade front, China’s export growth remains resilient, but risks from U.S. tariffs and volatile global markets could influence its net export strength moving forward.

Structural Concerns: The Roadblocks to Sustainable Growth

Although optimism surrounds Xi’s tech meetup, experts caution that China still faces deep-rooted issues:

While the tech push signals optimism, without significant policy breakthroughs, China’s long-term economic trajectory remains uncertain.