China has set an economic growth target of "around 5%" for 2025 and announced plans to inject billions of dollars into its struggling economy, which is now facing intensified trade tensions with the United States. The decision was unveiled as the National People's Congress (NPC), China's annual parliamentary gathering, commenced in Beijing.

The NPC, which largely rubber-stamps decisions made behind closed doors, is closely watched for policy shifts. This year's session is particularly significant as President Xi Jinping tackles mounting economic challenges, including weak domestic consumption, a real estate crisis, and rising unemployment.

Adding to these difficulties, former US President Donald Trump, in his latest policy move, has imposed a 10% tariff on Chinese imports, effective Tuesday. This follows an earlier 10% levy implemented in February, bringing the total US tariff on Chinese goods to 20%. The measures threaten China's export sector, which has been one of the few bright spots in its economy.

In response, Beijing swiftly announced retaliatory tariffs of 10%-15% on specific US agricultural imports, including corn, wheat, and soybeans—commodities for which China is the largest global market.

During the NPC, commonly referred to as the "Two Sessions," discussions are expected to focus on strategies to sustain economic growth in light of the new tariffs. Although China successfully met its 5% growth target last year—driven largely by record-breaking exports that resulted in a nearly $1 trillion trade surplus—maintaining that level will be more difficult in 2025.

"If the tariffs linger, Chinese exports to the US could drop by a quarter to a third," warned Harry Murphy Cruise, head of China economics at Moody's Analytics.

With exports under pressure, Beijing will have to rely more on domestic consumption—a long-standing challenge. Expanding domestic demand, which was the third priority in last year’s economic plan, is now expected to become the primary focus.

To stimulate consumer spending, the government has introduced trade-in programs allowing citizens to replace household appliances, cars, and electronic devices. More such initiatives are expected to be announced during the NPC. However, analysts remain skeptical about whether these efforts will be enough to boost consumption, given the pessimism among Chinese consumers.

Strict COVID-era restrictions, an ongoing real estate crisis, and regulatory crackdowns on the tech and finance sectors have made citizens cautious about spending. Additionally, China's limited social safety net has reinforced a culture of high savings as people prepare for potential unexpected expenses.

Despite these challenges, Chinese officials remain optimistic. CPCC spokesman Liu Jieyi emphasized that while the economy is facing "low demand," it still possesses "many advantages, strong resilience, and significant potential."

Another key focus of the NPC is investment in "high-quality development," a term President Xi uses to describe advancements in high-tech industries such as renewable energy and artificial intelligence (AI).

China, the world’s second-largest economy, has long sought to establish itself as a leader in cutting-edge technologies to reduce its reliance on Western imports. State media has highlighted the success of companies like DeepSeek and Unitree Robotics, which have garnered global attention as symbols of China's technological progress.

DeepSeek's achievements have already triggered an AI-driven stock market rally, drawing renewed interest from foreign investors. Meanwhile, a commentary in the state-run Xinhua newspaper emphasized that China's green energy initiatives and tech-driven economic transition will continue to serve as "important growth drivers."

However, the latest US tariffs—compounding those imposed during Trump's first term—threaten to disrupt China's economic plans. Analysts warn that these trade barriers could deter investor confidence.

"The chaos that tariffs leave in their wake is kryptonite for investment," said Murphy Cruise. "Tariffs are set to deliver a one-two punch to China's economy, landing blows to both exports and investment."

As the NPC continues, the world will closely watch how Beijing navigates these economic headwinds and whether its policy responses will be enough to counteract the impact of the escalating trade war with the US.