Proactive Macro Policies in China Expected to Stimulate Demand and Growth in 2025
The annual Central Economic Work Conference, held in Beijing from Wednesday to Thursday, emphasized the intention to implement more proactive macro policies, along with other important economic priorities. Experts have positively evaluated the policy plan, saying it will revitalize market confidence, drive demand and make way for sustained economic growth next year.
TroibNews 
The annual Central Economic Work Conference in Beijing, held from Wednesday to Thursday, underscored plans to implement more proactive macro policies alongside other critical economic priorities. Experts have responded positively to this policy framework, asserting that it will help restore market confidence, stimulate demand, and pave the way for sustained economic growth in the coming year.
According to the conference, China will embrace a "moderately loose" monetary policy and will lower the reserve requirement ratio and interest rates as needed to maintain sufficient liquidity.
Liu Yuanchun, president of Shanghai University of Finance and Economics, noted that this represents the first shift from a "prudent" to a "moderately loose" monetary stance in 14 years. He commented that this change will significantly boost banks' lending capabilities, lessen the interest burdens for borrowers, and, crucially, ensure ample liquidity.
The meeting laid out detailed plans involving various policy instruments, including fiscal deficits, government spending initiatives, ultra-long-term special treasury bonds, and special-purpose bonds.
Shi Yinghua, a researcher at the Chinese Academy of Fiscal Sciences, emphasized that these initiatives are designed to yield both immediate and long-term benefits, enhancing counter-cyclical adjustments and addressing external uncertainties.
The conference prioritized the urgent need to strategically boost consumption, enhance investment efficiency, and expand domestic demand across all sectors for next year's economic agenda. Experts believe that a more proactive and robust fiscal policy will be crucial in achieving these targets.
Luo Zhiheng, chief economist at Yuekai Securities, highlighted that the fiscal policy package is anticipated to produce early impacts that will more effectively stimulate aggregate demand.
Yang Zhiyong, director of the Chinese Academy of Fiscal Sciences, pointed out that the currently low fiscal deficit ratio provides more flexibility for implementing fiscal policies. He stated that an increase in the fiscal deficit ratio would generate additional funds to boost consumption and stimulate investment, thereby expanding domestic demand and offering stronger policy support for ongoing economic recovery and growth.
To effectively utilize fiscal policy tools to meet China's growth target of around 5 percent next year, an analysis by the China Finance 40 Forum recommends raising the fiscal deficit ratio for 2025 to 4 percent, issuing 2 trillion yuan in new long-term special treasury bonds, 3.9 trillion yuan in new special-purpose bonds, and using 400 billion yuan in surplus funds.
Allen M Lee for TROIB News
According to the conference, China will embrace a "moderately loose" monetary policy and will lower the reserve requirement ratio and interest rates as needed to maintain sufficient liquidity.
Liu Yuanchun, president of Shanghai University of Finance and Economics, noted that this represents the first shift from a "prudent" to a "moderately loose" monetary stance in 14 years. He commented that this change will significantly boost banks' lending capabilities, lessen the interest burdens for borrowers, and, crucially, ensure ample liquidity.
The meeting laid out detailed plans involving various policy instruments, including fiscal deficits, government spending initiatives, ultra-long-term special treasury bonds, and special-purpose bonds.
Shi Yinghua, a researcher at the Chinese Academy of Fiscal Sciences, emphasized that these initiatives are designed to yield both immediate and long-term benefits, enhancing counter-cyclical adjustments and addressing external uncertainties.
The conference prioritized the urgent need to strategically boost consumption, enhance investment efficiency, and expand domestic demand across all sectors for next year's economic agenda. Experts believe that a more proactive and robust fiscal policy will be crucial in achieving these targets.
Luo Zhiheng, chief economist at Yuekai Securities, highlighted that the fiscal policy package is anticipated to produce early impacts that will more effectively stimulate aggregate demand.
Yang Zhiyong, director of the Chinese Academy of Fiscal Sciences, pointed out that the currently low fiscal deficit ratio provides more flexibility for implementing fiscal policies. He stated that an increase in the fiscal deficit ratio would generate additional funds to boost consumption and stimulate investment, thereby expanding domestic demand and offering stronger policy support for ongoing economic recovery and growth.
To effectively utilize fiscal policy tools to meet China's growth target of around 5 percent next year, an analysis by the China Finance 40 Forum recommends raising the fiscal deficit ratio for 2025 to 4 percent, issuing 2 trillion yuan in new long-term special treasury bonds, 3.9 trillion yuan in new special-purpose bonds, and using 400 billion yuan in surplus funds.
Allen M Lee for TROIB News
