The highly regarded Central Economic Conference took place in Beijing from Wednesday to Thursday, at which the Chinese leadership set the priorities for economic work in 2025.
Xi Jinping, General Secretary of the Central Committee of the Communist Party of China, President of China and Chairman of the Central Military Commission, delivered an important speech at the annual conference.
According to the meeting, despite the “complex and serious situation of growing external pressure and increasing internal difficulties,” China has ensured the overall stability and steady progress of the economy. It is expected that the main goals and tasks for economic and social development in the be achieved in 2024.
He stressed that China needs to pursue more proactive macro policies, increase domestic demand and promote the integrated development of scientific and technological innovation and industrial innovation to achieve good economic performance in 2025.
In addition, efforts must be made to ensure the steady development of real estate and stock markets, avoid and defuse risks and external shocks in key areas, and stabilize expectations and stimulate vitality to promote sustainable economic recovery, it said at the meeting.
From fiscal policy to monetary policy
According to the meeting, China will also pursue a more “proactive” fiscal policy, including increasing the deficit ratio and issuing ultra-long special government bonds and municipal special-purpose bonds.
China’s public debt-to-GDP ratio stands at 67.5% at the end of 2023, according to the Finance Ministry, well below the International Monetary Fund (IMF) estimated average of 118.2% for G20 members and 123.4% for G7 Countries. China’s budget deficit has long been below 3%, significantly lower than that of other major economies.
Given the government’s low debt ratio, China’s budget has room to borrow more and expand the deficit, Finance Minister Lan Fo’an said in October.
The Central Economic Works Conference said China would pursue a “moderately loose” monetary policy and cut the reserve ratio and interest rates if necessary to ensure sufficient liquidity.
This is the country’s first transition from a “cautious” to a “moderately loose” monetary policy since 2011.
Since the start of 2024, the People’s Bank of China, the central bank, has cut the reserve requirement ratio for financial institutions twice by a total of 1 percentage point, unlocking about 2 trillion yuan (about $274.8 billion) in long-term liquidity.
From domestic demand to opening up
The Central Economic Conference listed the priorities for economic work in 2025 in nine aspects, from promoting consumption and developing new high-quality productive forces to preventing and managing risks in key areas, consolidating achievements in poverty alleviation and promoting green Development.
The meeting emphasized the need to vigorously boost consumption, improve investment efficiency and increase domestic demand in all sectors.
China remains one of the largest markets in the world. From January to October this year, China’s total retail sales of consumer goods reached nearly 40 trillion yuan, while last year’s total sales exceeded 47 trillion yuan, according to the National Bureau of Statistics.
A national program to promote trade in consumer goods unveiled in March has highlighted the untapped potential of China’s domestic demand. More than 30 million participants have participated in the program, generating a total revenue of over 400 billion yuan.
The two-day meeting also called for further efforts to promote high-level opening-up and ensure steady growth in foreign trade and investment.
“China’s development is open and inclusive,” Xi said Tuesday in Beijing, a day before the start of the annual meeting, at a meeting with leaders of major international economic organizations, including the IMF.
China will introduce new systems for an open economy with higher standards, provide more opportunities for other countries’ development and share more development advantages with the world, Xi told leaders at the Great Hall of the People.
Since December 1, China has granted zero tariff treatment on 100% of tariff lines to all least developed countries with which it has diplomatic relations.
This will help more products from these countries enter the Chinese market, sharing opportunities and boosting development, said Lyu Daliang, an official with China’s General Administration of Customs.
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