Within one month after the conclusion of the 2025 'Two Sessions', China's State Council has prioritized the introduction of policies in three key areas: consumption, standardization, and business protection - all major focuses outlined in this year's Government Work Report.
Economic Targets and Policy Direction
- GDP Growth: The government has set a 2025 growth target of around 5%, surpassing forecasts of 4%–4.7% by international agencies.
- Inflation: The consumer price index (CPI) target has been lowered to 2% for the first time since 2004, while other economic targets remain unchanged.
- Policy Focus: Domestic Demand as Key Economic Growth Engine
China is pivoting from the traditional "export + investment" growth model to one driven by "investment + consumption." Rising trade restrictions from the West are accelerating this shift, positioning domestic demand as the economy's primary driver and stabilizer. This transition will center on industrial upgrades and digital transformation to reshape domestic demand, fostering a "high-value-added supply and demand cycle." Priorities include boosting efficiency through autonomous and digitized supply chains, expanding intelligent application scenarios, and fostering a digital consumer ecosystem. Moreover, the government is strengthening legal protections for private enterprises, with the Private Sector Promotion Law expected to be enacted this year. At the same time, it is adopting a more open stance on foreign investment, easing market access restrictions.
Regulatory and Policy Shifts
- Industry Standards & Upgrades: While market entry barriers are being lowered, compliance requirements are tightening. Beijing is developing a national standardization framework, encouraging private enterprises to adopt modern corporate systems and supporting industry leaders in setting benchmarks to boost industrial upgrades. The refining and petrochemical sector is under pressure to accelerate its transition to green, smart, and digital operations. For the first time, policies explicitly call for shifting from traditional refining to high-value petrochemical production, promoting specialty chemicals, and transforming gas stations into integrated energy service hubs.
- Tax Oversight: Authorities are advancing plans to shift the liability for consumption tax on certain products from manufacturers to retailers and let local governments collect it. Although the pilot program for refined oil consumption tax reform is unlikely to be launched this year, regulatory tightening will continue to squeeze independent refiners and private gas stations. Combined with the growing adoption of alternative energy sources, gasoline and diesel demand is set to decline. China's gas station count is projected to shrink from 110,000 today to 90,000 by 2030, further intensifying challenges for the refining industry.
- Policy Enabler: 'Dual Carbon' Goals Driving Domestic Demand Upgrades
Carbon emission peaking policies are shifting from broad targets to concrete implementation. Pilot programs for zero-carbon industrial parks and factories are expanding, while carbon emission trading and carbon footprint mechanisms are being refined. Emissions control is evolving from 'soft constraints' to 'mandatory compliance' for enterprises. Renewable energy, led by green electricity, is becoming the dominant power source. Fossil fuel consumption is shifting toward low-carbon upgrades and strategic reserves to ensure energy security.
The above content is the major conclusions and highlights extracted from China (Energy Transition) Policy Perspective. To get detailed full text, send an email to glconsulting@mysteel.com
