Photo shows a view of Nansha Port in Guangzhou, South China's Guangdong province. [Photo provided to chinadaily.com.cn]

China, which has positioned itself as a leading force in international trade, has long been regarded as one of the drivers of the global economy. However, as Premier Li Qiang noted in the 2025 Government Work Report delivered at the third session of the 14th National People's Congress, China faces some challenges triggered by domestic factors and an increasingly complex external environment.

In recent years, the country's economic growth has slowed, raising concerns about its impact both domestically and globally. Addressing these concerns requires acknowledging that private sector confidence needs to be improved. Restoring private sector trust, actively expanding investment and aligning them with the needs of high-quality development are key components in China's economic recovery.

One of the biggest questions going into this year's two sessions — the annual meetings of the NPC, China's top legislature, and the National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body — was how much attention would be given to policy proposals promoting economic growth. Those questions were answered by the 2025 Government Work Report, which prioritizes a broad-based approach to economic stabilization via policies aimed at increasing consumption.

The government aims to address the root causes of job market challenges and real estate instability by implementing policies that will increase incomes, expand employment and reduce financial burdens.

Efforts to stimulate immediate consumption during the past year have focused on trade-in programs and service sectors like tourism.

While early data shows success in both the trade-in programs and tourism, broader measures will be implemented to enhance overall consumption. China's economic recovery has sparked optimism both domestically and internationally, thanks to proactive measures and some promising indicators. Recent data from the National Bureau of Statistics shows that China's industrial production, consumer spending and investment have all shown faster year-on-year growth.

The recent stimulus proposals in the two sessions, including cutting interest rates and supporting the property sector aim to boost consumer demand and stabilize the economy. While some challenges remain, these efforts reflect China's commitment to revitalizing growth.

Despite these challenges, China's economic resilience and strategic policy adaptations are poised for growth opportunities, particularly in technology and green energy sectors, with innovation expected to play a major role in driving recovery.

The strength of China's economic recovery will depend in large part on the magnitude and allocation of policy stimulus. Implementing proactive fiscal policies aimed at stimulating domestic demand and addressing challenges such as weak consumption, a struggling real estate market and local government debt will make a substantial difference in economic growth in the months ahead.

Additionally, policies aimed at attracting and retaining foreign investment are a key component, which will create a more favorable environment for foreign companies. The two sessions had substantial discussions on strategies aimed at strengthening China's market access for foreign investors, easing financial restrictions on foreign companies, encouraging a level playing field for foreign businesses, reducing regulatory hurdles, and improving legal protections for foreign firms.

During the two sessions, China announced that it achieved 5 percent growth last year, and for this year, the growth target continues to be around 5 percent. China's positive outlook on fiscal policy and the GDP growth target — including raising the fiscal deficit target to approximately 4 percent of GDP for 2025 — signals confidence that the country can maintain steady growth despite heightened external uncertainties. That said, I think that we'll see some moves to address concerns about managing local government debt levels by setting annual caps on bond issuance and improving debt reporting transparency. The bottom line is to ensure fiscal stability and promote consumer spending.

Contrary to some Western pundits, China's economic recovery in 2025 is showing some promising signs in retail sales and industrial output, foreign trade, service industry growth, and the labor market. While some serious challenges remain, particularly in the local property sector, a looming trade war with the United States, and fears of a potential global economic downturn, China has shown remarkable resilience and adaptability in the face of uncertainties caused by a shifting global economy. The country has reduced its dependency on US markets, encouraged non-US trade partnerships, fostered domestic consumption, and successfully nurtured homegrown high-tech and artificial intelligence innovations. China's performance thus far for the year suggests that the nation is poised for steady economic growth in 2025.

The author is a professor of Political Science at the University of Texas at San Antonio, the US. The views do not necessarily reflect those of Discover Shannxi.