BEIJING, Jan. 2, 2025
/PRNewswire/ -- A news report from Beijing Review:
The year-end Central Economic Work Conference is a pivotal event
in China's economic calendar,
serving as a platform to analyze the nation's economic landscape,
set the policy tone, and outline key priorities for the coming
year. In 2024, it convened in Beijing on December 11-12.
"China is on track to achieve
its key economic and social development goals for the year, with an
anticipated economic growth rate of around 5 percent," said Han
Wenxiu, Executive Deputy Director of the Office of the Central
Committee for Financial and Economic Affairs, elaborating on the
key points of the conference at a meeting on December 14.
He added that China's
contribution to global economic growth is expected to approach 30
percent. Employment and prices have remained stable, a basic
equilibrium in the balance of payments has been largely maintained,
and the country's foreign exchange reserves have remained robust at
over $3.2 trillion.
Despite this, the adverse effects of changes in the external
environment have intensified, and China's economy continues to face a range of
difficulties and challenges. Challenges discussed at the conference
include insufficient domestic demand, operational difficulties for
some businesses, pressure on employment and income growth for the
population, and persistent risks and uncertainties.
However, according to the assessment presented at the
conference, the foundation of the economy remains stable, with
sufficient advantages, strong resilience and huge potential.
The conference outlined key adjustments to the country's
macroeconomic policies, emphasizing a shift toward more proactive
and impactful approaches. It called for the adoption of a "more
proactive fiscal policy" and a "moderately loose monetary policy."
Han said this marks a major change in both language and direction
when compared to previous years.
The wording regarding fiscal policy has been adjusted from
"proactive" to "more proactive," implying additional efforts will
follow in 2025.
The deficit-to-GDP ratio was set at 3 percent for 2024, and the
conference first explicitly stated the need to set a higher deficit
ratio for 2025 to ensure that fiscal policies will maintain
continuity and become more effective.
To address the current issue of insufficient domestic demand, it
is necessary to increase government spending. And it's both
necessary and feasible to increase the deficit ratio, said a recent
commentary by newspaper Economic Daily.
From an international perspective, China's government debt ratio is much lower
than that of major economies and emerging market countries.
According to the International Monetary Fund, by the end of 2023,
the average government debt ratio of Group of Seven countries was
123.4 percent, while that of China
stood at 67.5 percent. This indicates that there remains
considerable room for the Central Government to issue debts and
expand the deficit.
In addition, China will also
increase the issuance of ultra-long special treasury bonds and
local government special-purpose bonds.
The conference also emphasized the need to optimize the
structure of fiscal expenditures, improve the efficiency of fund
usage, and place greater emphasis on enhancing people's livelihoods
and stimulating consumption.
The structure of fiscal expenditures should align with the stage
of economic development, shifting from an investment-focused
approach to one that balances investment and consumption. This
marks a transition from a construction-driven fiscal policy to one
that prioritizes people's livelihoods, said Yuan Haixia, Deputy
Director of the Research Institute of China Chengxin Credit Rating
Group.
Monetary policy will shift from "prudent" to "moderately loose,"
with reductions in the reserve requirement ratio and interest rates
at an appropriate time, according to the conference.
China's central bank, the
People's Bank of China, adjusts
its monetary policy in response to changes in the economic
situation. Since 2011, China's
monetary policy has consistently been "prudent." This adjustment is
the first change in over a decade.
Zeng Gang, Director of the
Shanghai Institution for Finance and Development, told Xinhua News
Agency that a moderately loose monetary policy helps maintain
reasonable liquidity, reduces the overall financing costs in
society and further expands domestic demand, unlocking the
potential for consumption and investment.
Han said these policies are beneficial for enhancing
counter-cyclical adjustments, better addressing the instability and
uncertainty in economic operations, and providing strong policy
support to achieve the annual goals and objectives.
Counter-cyclical adjustment refers to the government's use of
policy tools and measures to smooth out the fluctuations of the
entire economic cycle, helping to better promote economic
development by responding to different stages of the economic
cycle.
The conference outlined nine key tasks for 2025, with
"vigorously boosting consumption, improving investment efficiency
and expanding domestic demand on all fronts" listed as the top
priority.
"In recent years, expanding domestic demand has been a top
priority, and it is especially crucial in 2025, as external demand
is expected to further weaken," Xu Hongcai, Deputy Director of the
Economic Policy Commission at the China Association of Policy
Science, told Beijing Review. In this context, to ensure
steady economic growth, it is essential to boost internal demand.
This can be achieved by focusing on both investment and
consumption, he said.
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SOURCE Beijing Review
