An aerial view of a new city district in southern China's Nanning city on Feb. 28, 2025.

China on Wednesday set its GDP growth target for 2025 at "around 5%" as it starts its annual parliamentary meeting amid escalating trade tensions with the U.S, according to a copy of the government work report seen by CNBC.

Beijing raised its budget deficit target to "around 4%" of GDP from 3% last year.

The 4% deficit would mark the highest on record going back to 2010, according to data accessed via Wind Information. The prior high was 3.6% in 2020, the data showed.

The government report laid out a plan to issue 1.3 trillion yuan ultra-long-term special treasury bonds in 2025, 300 billion yuan more than last year. Another 500 billion yuan worth of special treasury bonds will be issued to support large state-owned commercial banks.

The report reiterated Beijing's plan to "adopt a more proactive fiscal policy."

In an implicit acknowledgement of sluggish domestic demand, Beijing also revised down its annual consumer price inflation target to "around 2%" -- the lowest in more than two decades -- from 3% or higher in prior years, according to the Asia Society Policy Institute.

The new inflation goal would act more as a ceiling than a target to be realized. Consumer prices climbed just 0.2% in 2024 and 2023, while producer prices have declined for over two years.

The country's annual parliamentary gathering, known as the "Two Sessions," started Tuesday with the opening ceremony of the Chinese People's Political Consultative Conference -- a top advisory body.

The National People's Congress kicked off its meeting Wednesday and is expected to wrap up its annual session on March 11. The foreign minister and heads of several economic departments are due to hold press conferences in the interim.