Key Takeaways from China’s 2025 Two Sessions – Policy Priorities, Annual Budget, and Legislative Plans 

The China Two Sessions 2025 have set the stage for the country’s economic and policy direction this year. With the Government Work Report outlining priorities in economic stability, technological innovation, and legislative reforms, businesses—both domestic and foreign—must stay informed on key developments. This article breaks down the most significant policy updates, budget allocations, and expected regulatory changes announced during the Two Sessions, offering insights into what lies ahead for investors and enterprises operating in China.

The Two Sessions concluded on March 11, 2025, marking the end of China’s annual political meetings, which set key policies for the year. Since the release of the Government Work Report (GWR) on March 5, further details have emerged about China’s policy trajectory for 2025. These updates provide a clearer view of the government’s focus on economic stability, technological innovation, legislative changes, and the continued effort to enhance business conditions, highlighting significant developments for both domestic and foreign enterprises.

In this article, we cover some of the key revelations about China’s policy priorities for 2025, as well as upcoming legislative changes.

Draft 2025 Budget

On March 13, the Ministry of Finance released the Report on the Implementation of the Central and Local Budgets for 2024 and the Draft Central and Local Budgets for 2025 (hereinafter, the “Draft 2025 Budget”). This document outlines China’s fiscal performance in 2024 and proposes key budgetary policies, priorities, and spending plans for 2025, emphasizing economic stability, high-quality development, and risk prevention.

The Draft 2025 Budget provides more details on the composition of the various debt allocations that were introduced in the 2025 GWR, as well as outlining further debt allocations to support domestic demand, promote consumption, enhance social welfare, and maintain fiscal stability. These include:

• Special long-term government bonds: A total of RMB 1.3 trillion (US$179.7 billion) in special long-term government bonds will be issued, an increase of RMB 300 billion (US$41.5 billion) from the previous year, of which:
  • RMB 800 billion (US$110.6 billion) will be allocated to enhance support for “Two Major” projects (refers to projects that implement major national strategies and construct security capabilities).
• RMB 500 billion (US$69.1 billion) will be directed towards strengthening and expanding the implementation of “Two New” policies (refers to large-scale equipment upgrades and consumer goods trade-ins).
• General budgetary allocations:
  • RMB 7.35 trillion (US$1 trillion) has been arranged for central budgetary investments, an increase of RMB 35 billion (US$4.8 billion) from the previous year, ensuring alignment between investment plans and budget arrangements.
  • RMB 10.3 trillion (US$1.4 trillion) in central government transfer payments to local governments, an 8.4 percent increase from 2024, of which:
    • RMB 2.7 trillion (US$373.3 billion) will be allocated for equity transfer payments.
    • RMB 479.5 billion (US$66.3 billion) will be allocated to support county-level fiscal guarantees.
  • High-quality development incentive funds: RMB 50 billion (US$6.9 billion) has been earmarked to encourage local governments to proactively develop their economies and increase revenues.

Increased funding for education

In addition to the efforts to develop high-tech industries and upgrade traditional industries, the Draft 2025 Budget outlines support policies to strengthen China’s innovation capabilities through science and education. Specific financial support policies include increasing central-level education expenditure by 5 percent from the previous year to RMB 174.4 billion (US$24.1 billion) and allocating RMB 80.9 billion (US$11.2 billion) in subsidies for local students, an 11.5 percent increase from the previous year.

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In addition to the financial support, the Draft 2025 Budget also seeks to optimize the distribution of educational resources to address disparities between regions, urban and rural areas, and different schools. Key mechanisms include implementing free preschool education and promoting diverse high school development to ensure equitable access to quality early and secondary education. In vocational education, a differentiated per capita funding system is being developed to better align education with market needs. Additionally, the government is supporting the reform and development of higher education institutions, with an emphasis on building world-class universities, enhancing key disciplines, and nurturing top talent.

Increased funding for public healthcare

The Draft 2025 Budget outlines several financial support policies aimed at enhancing healthcare services and public health. The central government is increasing funding for basic public health services, with subsidies raised to RMB 99 (US$13.69) per person annually. There is a focus on improving the capacity of primary healthcare services and strengthening healthcare talent training. The budget also increases subsidies for urban and rural residents’ health insurance to RMB 700 (US$96.78) per person per year, alongside reforms in medical insurance payment methods and fund management.

Support is extended to traditional Chinese medicine and elderly care services, with the development of a long-term care insurance system and pilot projects to improve elderly care in rural areas. The pension system is also supported, with an increase in basic pensions and efforts to expand coverage for enterprise pensions. Additionally, the budget prioritizes social safety nets for vulnerable populations and provides funding for emergency response services to improve disaster prevention and relief capabilities at the grassroots level. These policies aim to improve healthcare accessibility, quality, and equity across China.

2025 legislative agenda

On March 8, Zhao Leji, Chairman of the Standing Committee of the National People’s Congress (NPC) delivered the Work Report of the Standing Committee of the NPC (the “ NPC Standing Committee Work Report”), which outlined the legislative agenda for 2025.

Per the report, the NPC aims to approve a total of 34 new laws and amendments in 2025. Among them are several new laws and amendments that are of note to foreign businesses. For instance, the draft Private Economy Promotion Law aims to create a favorable legal environment for private businesses in China. The law emphasizes fair competition, ensuring that private economic organizations, including foreign enterprises, can equally access markets, and necessary resources, and participate in government procurement. It also improves the financing environment for private businesses, including support for foreign businesses engaging in major national projects.

Another update of note is the amendment to China’s Cybersecurity Law (CSL). Coming into law in 2017, the CSL was China’s first major piece of legislation governing the digital sphere. Since its release, however, China has released a series of other related laws and regulations, most notably the Data Security Law (DSL) and the Personal Information Protection Law (PIPL). As such, the legislative environment with regard to data and the internet has matured significantly in the intervening years, leading to some discrepancies between the CSL and subsequent laws.

There are also several industry-specific laws set to be passed or amended in 2025, which will have implications for companies operating within these sectors. These include amendments to the Food Safety Law, Agriculture Law, and Fisheries Law, which will impact companies operating within the food supply chain.

Meanwhile, the agenda also seeks to conclude amendments to three laws directly related to the foreign-facing economy, namely the Maritime Law, the Foreign Trade Law, and the Arbitration Law.

The draft of the Foreign Trade Law, released in September 2024, introduces several changes that could impact foreign companies. For instance, it eases market access through mechanisms such as a Negative List for services trade and seeks to better align with international trade standards, making it easier for foreign traders to conduct business with China. However, stricter compliance measures are introduced, requiring companies to adhere to new rules governing trade services and policies.

The proposed amendments to China’s Arbitration Law aim to align with international standards, providing greater clarity and predictability for foreign businesses. They also seek to improve judicial support for arbitration, enhance consistency in enforcement, and increase China’s competitiveness in international arbitration, benefiting foreign companies involved in cross-border trade and investment.

In addition to the 34 pieces of legislation, the NPC Standing Committee Work Report also stated that it will seek to strengthen legislative research on emerging fields such as artificial intelligence, the digital economy, big data, autonomous driving, the low-altitude economy, and aerospace.

Driving technological innovation

Perhaps the most important theme of the 2025 Two Sessions besides the economy was technological innovation. This ranked high on the list of priorities in the GWR delivered on March 5, which called for developing science and innovation through various mediums, including unleashing the potential of New Quality Productive Forces (NQPFs) (a growth model focused on rapid scientific and technological innovation and the upgrading of traditional industries), growing emerging and future industries, promoting the transformation and upgrading of traditional industries, stimulating the innovation of the digital economy, and developing science and technology talent and expertise through the education system.

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The importance of technological innovation in the 2025 policy agenda was further underscored by the tech-focused meetings attended by President Xi Jinping throughout, as well as the statements of Chinese officials in media appearances throughout the duration of the Two Sessions.

For instance, during a press meeting on March 6, the Chairman of the China Securities Regulatory Commission Wu Qing stated that the 2025 Two Sessions had “seen an increasing focus on technology.”

The chairman emphasized several key areas for improving support for technology enterprises, highlighting the need to accelerate the development of specialized support mechanisms for tech companies, combining market efficiency with active government involvement. This includes enhancing systems for listing unprofitable companies, improving M&A processes, and focusing on fostering high-quality technology enterprises.

Additionally, he stressed the importance of cultivating long-term and patient capital, pointing out that many successful tech companies rely on sustained investment over time. He also called for increasing the availability of financial products and services for technological innovation, including expanding beyond traditional stock listings to include bonds, convertible bonds, and asset securitization, providing more comprehensive capital market support for tech companies.

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Meanwhile, Xi Jinping attended several meetings with delegates in which he emphasized the importance of technological innovation.

During a meeting with NPC delegates from Jiangsu Province on March 5, Xi emphasized the critical importance of technological innovation for driving economic development. He stressed that technological innovation and industrial innovation are key pathways for developing NQPFs. He specifically urged Jiangsu – one of China’s most important economic centers – to take the lead in integrating these two areas by focusing on the creation of a modern industrial system. He highlighted the need for a coordinated approach that combines education, science, and talent development to produce more technological breakthroughs and successfully transform them into tangible productivity.

Xi also emphasized the necessity of promoting industrial innovation, which includes upgrading traditional industries and expanding into new, strategic, and emerging sectors. He called for the development of platforms and systems to seamlessly connect innovation and industrial chains, strengthening the role of enterprises as leaders in innovation.

Education

In another meeting with representatives from the education sector on March 6, 2024, Xi Jinping emphasized the crucial role of education in supporting technological innovation and talent development. He highlighted the need to strengthen education to create a system where talented individuals emerge continuously, are fully utilized, and contribute to national development.

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Xi stressed that building a strong nation in education, science, and technology requires deep integration. He called for a high-quality education system that aligns with modern needs, supports foundational and interdisciplinary research, and fosters innovation-driven economic growth. He also underscored the importance of reforming education governance, improving school autonomy, and optimizing resource allocation to enhance efficiency.

To drive technological innovation, Xi advocated for greater collaboration between universities, enterprises, and local governments, enhancing research commercialization and strengthening the link between education and economic development. He also emphasized digital transformation in education, promoting lifelong learning and a knowledge-based society.

Furthermore, he called on policymakers, educators, and industry leaders to contribute to education reform and innovation to enhance the country’s overall innovation capacity and maintain its competitive edge in science and technology.

Support for technological innovation in the Draft 2025 Budget

In addition to the directives of top-level officials, the Draft 2025 Budget introduces several specific financial policies for driving technological innovation.

For instance, the Draft 2025 Budget outlines the following specific financial tools for boosting tech innovation:

• Allocation of RMB 11.9 billion (US$1.6 billion) in special manufacturing funds from the central government, a 14.5 percent increase from the previous, to promote high-quality development in key areas of the manufacturing sector and enhance the resilience and security of industrial and supply chains.
• Allocating an additional RMB 200 billion (US$27.7 billion) in ultra-long-term special government bonds to support equipment upgrades, an increase of RMB 50 billion from the previous year.

The budget also states that the government will expand the scope of support and lower eligibility thresholds to encourage advanced technologies while phasing out outdated ones.

Meanwhile, to modernize and upgrade the industrial system, the budget outlines the following measures:

• Deepening the implementation of China’s First-Set (First-Batch) Insurance Compensation Policy, which seeks to accelerate the adoption of domestically innovated technology and materials by mitigating market risks through insurance-backed financial support, encouraging industrial uptake.
• Building a more efficient government investment fund management system and encouraging the development of venture capital funds to attract more private capital into technology sectors.
• Strengthening the role of enterprises in the innovation and industrial chains, supporting enterprises in national tech projects with tax breaks, special funding, and government procurement.
• Promote the development of specialized and innovative small- and medium-sized enterprises (SMEs), assisting their digital transformation and improving their competitiveness.

In addition to the efforts to develop high-tech industries and upgrade traditional industries, the central government has allocated RMB 398.1 billion (US$55 billion) for scientific and technological expenditures, an increase of 10 percent from the previous year, with a stronger focus on fundamental research, applied fundamental research, and national strategic scientific and technological projects.

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