China maps out 2025 economic plans, vows more proactive macro policies

BEIJING, Dec. 13, 2024 /PRNewswire/ -- The closely watched Central Economic Work Conference was held in Beijing from Wednesday to Thursday as Chinese leaders decided priorities for the economic work in 2025.

Xi Jinping, general secretary of the Communist Party of China Central Committee, Chinese president and chairman of the Central Military Commission, delivered an important speech at the annual conference.

According to the meeting, despite the "complex and severe situation of growing external pressures and increasing internal difficulties," China has ensured the overall stability and steady progress of the economy, and the major goals and tasks for economic and social development in 2024 are expected to be accomplished.

It stressed that China must adopt more proactive macro policies, expand domestic demand, and promote the integrated development of scientific and technological innovation and industrial innovation to do a good job in economic work in 2025.

Efforts must also be made to secure the steady development of the real estate and stock markets, guard against and defuse risks and external shocks in key areas, and stabilize expectations and stimulate vitality so as to promote sustained economic recovery, said the meeting.

From fiscal policy to monetary policy

According to the meeting, China will also adopt a "more proactive" fiscal policy, including an increase in the ratio of deficit and in the issuance of ultra-long special treasury bonds and local government special-purpose bonds.

China's government debt-to-GDP ratio, according to the Ministry of Finance, stood at 67.5 percent at the end of 2023, much lower than the average 118.2 percent among G20 members and 123.4 percent for G7 countries estimated by the International Monetary Fund (IMF). China's fiscal deficit has long been below 3 percent, significantly lower than other major economies.

With a low government leverage ratio, China's central budget has room for increased borrowing and deficit expansion, Minister of Finance Lan Fo'an said in October.

The Central Economic Work Conference said China will adopt a "moderately loose" monetary policy and lower the reserve requirement ratio and interest rates when necessary to ensure adequate liquidity.

It marks the first "prudent" to "moderately loose" transition in the country's monetary stance since 2011.

Since the beginning of 2024, the People's Bank of China, the central bank, has cut the reserve requirement ratio twice, by 1 percentage point in total, for financial institutions, releasing approximately 2 trillion yuan (about $274.8 billion) in long-term liquidity.