China has kicked off its key political and legislative meetings this week as trade tensions escalate following the new tariffs imposed by President Donald Trump's administration in the United States.  

Thousands of delegates from around the country have descended on the capital, Beijing, for the annual "Two Sessions" — near-concurrent meetings of China's rubber-stamp legislature, the National People's Congress (NPC), and its top political advisory body, the Chinese People's Political Consultative Conference (CPPCC).

The delegates are known to approve decisions already made behind closed doors by the leadership of the ruling Chinese Communist Party (CCP). 

However, these annual events still serve as a crucial window into Beijing's policy direction for the year, with 2025 taking on a greater significance given Trump's attempts to redirect global trade and investment flows by imposing sweeping tariffs on US economic partners.

Speaking at the opening session, Chinese Premier Li Qiang announced a 5% growth target for 2025, despite the uncertain external environment and ongoing domestic economic weakness.

"The multilateral trading system is experiencing disruptions, and tariff barriers continue to increase," Li said while delivering his annual work report to the NPC.

He described the escalating US-China competition as changes "unseen in a century" and stressed that "an increasingly complex and severe external environment may exert a greater impact on China in areas such as trade, science and technology."

On March 10, before the Two Sessions conclude next week, China's additional 10%-15% tariffs on certain US imports will come into effect — a retaliatory move following an additional 10% levy imposed by the Trump administration on Chinese goods.

"If war is what the US wants, be it a tariff war, a trade war or any other type of war, we're ready to fight till the end," China's Foreign Ministry declared earlier this week.

Beijing's response, however, has come across as simply showcasing its capability to hit back, while the actual impact may be "much smaller than expected," said Chenggang Xu, a senior research scholar at the Stanford Center on China's Economy and Institutions.

"Trump's actual tariffs on mainland China are way lower than what he promised during his campaign. Plus, he's also hitting US allies with tariffs at the same time," Xu told DW, referring to the US leader's earlier remark about imposing 60% tariffs on Chinese goods.

Antonia Hmaidi, a senior analyst at the Mercator Institute for China Studies (MERICS) with a research focus on technology, said US tariffs are unlikely to force Beijing to alter its vision for the Chinese economy.

"The tariffs could have a pretty big impact on GDP growth, but it is really important to keep in mind that GDP growth isn't the main characteristic that [Chinese leader] Xi Jinping focuses on," said Antonia Hmaidi, a senior analyst at the Mercator Institute for China Studies (MERICS) with a research focus on technology.

"Beijing has a really big focus on the long-term trajectory," she told DW, adding that "the vision for the Chinese economy shouldn't be derailed by, in Beijing's minds, short-term issues like tariffs."

Compared to tariffs, analysts believe US measures to restrict Chinese access to cutting-edge tech, especially semiconductors, will have a greater effect on China.

"We're seeing a continued emphasis on the idea that China will need to become better at high-tech manufacturing in AI, in green tech and biotech," Hmaidi said, as "the Chinese leadership still believes that it can come out on top" in the ongoing trade row.

Xu also pointed out that the high-tech sector being a key focus "isn't anything new" in China. "It's been part of long-term plans like 'Made in China 2025,' which have been in place for years," he said.

"Made in China 2025" is a decade-old government initiative aimed at establishing China as a global leader in high-tech manufacturing by 2025. The project has been rarely mentioned by Beijing in recent years as Western countries started paying high attention to it.

But terms used in recent government work reports, such as AI Plus initiative and Industrial Internet, highly mirror policies of the tech self-reliance plan.

In the 2025 work report, one of the policy priorities is to "unleash the creativity of the digital economy." Premier Li said that the country will "support the extensive application of large-scale AI models and vigorously develop… intelligent connected new-energy vehicles, AI-enabled phones and computers, and intelligent robots."

The recent success of Chinese AI company DeepSeek also serves as proof for Beijing that the country is on the right path, Hmaidi said. She also expects the US to further tighten its export controls to make sure that China doesn't become a peer competitor in AI.

China is currently grappling with an economic slowdown caused by weak domestic demand, a struggling real estate market and high unemployment, among other problems.

At the Two Sessions, there has been talk of laying a greater emphasis on boosting consumption to accelerate growth.

"We have set the deficit-to-GDP ratio for this year at around 4%, an increase of one percentage point over last year," Li announced, along with a 1.6 trillion yuan (€209.2 billion, $221 billion) increase in government deficit from last year.

China is preparing to face further external challenges by moderately loosening its fiscal policy, Hmaidi said. "The potential for more tariffs in the future is one of the reasons why consumption is being highlighted more around this time," she noted.

Xu, however, underlined that "real solutions" to reverse China's economic slowdown are still lacking. "They're only discussing how to stimulate demand, not addressing the deeper problem — that household income makes up too small a share of the economy," he said. "What's really needed is a structural change to raise that share."

Edited by: Srinivas Mazumdaru