What are the Primary Goals for China's Economic Agenda in 2025?
The annual Central Economic Work Conference in China took place from Wednesday to Thursday in Beijing, emphasizing the importance of implementing a more proactive fiscal policy and a moderately accommodative monetary policy, along with the necessity to broaden domestic demand across the board.
TroibNews 
China hosted its annual Central Economic Work Conference in Beijing from Wednesday to Thursday, emphasizing the need for a more proactive fiscal policy and a moderately accommodative monetary policy, along with efforts to boost domestic demand across various sectors.
During the meeting, it was established that the country should pursue a more proactive fiscal policy, including an increase in the deficit-to-GDP ratio. This strategy aims to ensure that fiscal policy remains robust and impactful. Additionally, the meeting called for implementing a moderately accommodative monetary policy involving timely reductions in the reserve requirement ratio and interest rates to maintain sufficient liquidity. Improved coordination between fiscal, monetary, employment, industrial, regional, trade, environmental, and regulatory policies was also highlighted as critical in conjunction with the country’s reform and opening-up initiatives.
Experts provided insights into the meanings of "more proactive" fiscal policies and "moderately accommodative" monetary policies, as well as ways to enhance domestic demand.
Proactive Fiscal Policy
The meeting underscored the significance of a more proactive fiscal policy for the upcoming year. Experts believe this indicates an expectation for stronger policy support ahead.
"To be more proactive means to make full use of the favorable and positive factor of China's fiscal policy space," stated Yang Zhiyong, head of the Chinese Academy of Fiscal Sciences.
Yang noted that with China's current deficit-to-GDP ratio being relatively low, increasing this ratio could generate more funds to foster consumption and investment, ultimately expanding domestic demand and reinforcing economic growth.
Additionally, experts believe that advocating for a "more proactive" fiscal policy reflects the continuity and stability of fiscal strategies and represents a progressive effort stemming from the current year's fiscal measures.
Luo Zhiheng, chief economist at Yuekai Securities, mentioned that the timely issuance and execution of a range of fiscal policies is anticipated to aid in boosting aggregate demand.
Yang added that effectively utilizing fiscal policy tools will help achieve policy objectives. He pointed out that raising the ceiling on local government special-purpose bonds this year enhances local financial resources while supporting basic public services, public sector salaries, and grassroots government operations.
Moderately Accommodative Monetary Policy
Experts highlighted that next year’s monetary policy is set to be moderately accommodative, taking into account the current economic landscape, external uncertainties, and planning for the upcoming year.
Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company Limited, indicated that this decision sends a positive signal, likely uplifting confidence among stakeholders and stabilizing market expectations.
A moderately accommodative monetary policy indicates a supportive financial stance that aims to reduce overall financing costs for both businesses and households. Dong noted the significance of reducing reserve requirements and interest rates as necessary to ensure abundant liquidity, indicating that interest rates would remain low and the credit environment would improve.
This policy approach is expected to facilitate more investments in key areas including scientific and technological advancements, green development, and consumer finance, thereby enhancing societal innovation and dynamism.
Expanding Domestic Demand
"Vigorously boosting consumption, improving investment efficiency and expanding domestic demand on all fronts" was emphasized as the top priority among nine critical tasks for the upcoming economic work.
The conference resolved to initiate a dedicated campaign focused on stimulating consumption, particularly aimed at increasing income and reducing the financial pressures on low- and middle-income earners.
According to Liu Yuanchun, president of the Shanghai University of Finance and Economics, this special consumption campaign is expected to make a significant impact. "In the past, we did not have such a campaign to expand consumption, especially a unified national one," he noted, stressing the necessity for additional efforts and policy tools to enhance consumption.
The meeting also advocated for intensified initiatives around large-scale equipment upgrades, consumer goods trade-in programs, and the promotion of emerging sectors including the "debut economy," "ice and snow economy," and "silver economy."
Li Chengjian from the Development Research Center of the State Council commented that the anticipated benefits of trade-in programs and a suite of incremental policies have led to quick rebounds in the consumption of products such as automobiles, home appliances, and furniture. He emphasized the importance of sustaining and enhancing consumption recovery, nurturing new drivers such as customized, experiential, and service consumption, and continuously exploring new consumption opportunities.
Mark B Thomas contributed to this report for TROIB News
During the meeting, it was established that the country should pursue a more proactive fiscal policy, including an increase in the deficit-to-GDP ratio. This strategy aims to ensure that fiscal policy remains robust and impactful. Additionally, the meeting called for implementing a moderately accommodative monetary policy involving timely reductions in the reserve requirement ratio and interest rates to maintain sufficient liquidity. Improved coordination between fiscal, monetary, employment, industrial, regional, trade, environmental, and regulatory policies was also highlighted as critical in conjunction with the country’s reform and opening-up initiatives.
Experts provided insights into the meanings of "more proactive" fiscal policies and "moderately accommodative" monetary policies, as well as ways to enhance domestic demand.
Proactive Fiscal Policy
The meeting underscored the significance of a more proactive fiscal policy for the upcoming year. Experts believe this indicates an expectation for stronger policy support ahead.
"To be more proactive means to make full use of the favorable and positive factor of China's fiscal policy space," stated Yang Zhiyong, head of the Chinese Academy of Fiscal Sciences.
Yang noted that with China's current deficit-to-GDP ratio being relatively low, increasing this ratio could generate more funds to foster consumption and investment, ultimately expanding domestic demand and reinforcing economic growth.
Additionally, experts believe that advocating for a "more proactive" fiscal policy reflects the continuity and stability of fiscal strategies and represents a progressive effort stemming from the current year's fiscal measures.
Luo Zhiheng, chief economist at Yuekai Securities, mentioned that the timely issuance and execution of a range of fiscal policies is anticipated to aid in boosting aggregate demand.
Yang added that effectively utilizing fiscal policy tools will help achieve policy objectives. He pointed out that raising the ceiling on local government special-purpose bonds this year enhances local financial resources while supporting basic public services, public sector salaries, and grassroots government operations.
Moderately Accommodative Monetary Policy
Experts highlighted that next year’s monetary policy is set to be moderately accommodative, taking into account the current economic landscape, external uncertainties, and planning for the upcoming year.
Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company Limited, indicated that this decision sends a positive signal, likely uplifting confidence among stakeholders and stabilizing market expectations.
A moderately accommodative monetary policy indicates a supportive financial stance that aims to reduce overall financing costs for both businesses and households. Dong noted the significance of reducing reserve requirements and interest rates as necessary to ensure abundant liquidity, indicating that interest rates would remain low and the credit environment would improve.
This policy approach is expected to facilitate more investments in key areas including scientific and technological advancements, green development, and consumer finance, thereby enhancing societal innovation and dynamism.
Expanding Domestic Demand
"Vigorously boosting consumption, improving investment efficiency and expanding domestic demand on all fronts" was emphasized as the top priority among nine critical tasks for the upcoming economic work.
The conference resolved to initiate a dedicated campaign focused on stimulating consumption, particularly aimed at increasing income and reducing the financial pressures on low- and middle-income earners.
According to Liu Yuanchun, president of the Shanghai University of Finance and Economics, this special consumption campaign is expected to make a significant impact. "In the past, we did not have such a campaign to expand consumption, especially a unified national one," he noted, stressing the necessity for additional efforts and policy tools to enhance consumption.
The meeting also advocated for intensified initiatives around large-scale equipment upgrades, consumer goods trade-in programs, and the promotion of emerging sectors including the "debut economy," "ice and snow economy," and "silver economy."
Li Chengjian from the Development Research Center of the State Council commented that the anticipated benefits of trade-in programs and a suite of incremental policies have led to quick rebounds in the consumption of products such as automobiles, home appliances, and furniture. He emphasized the importance of sustaining and enhancing consumption recovery, nurturing new drivers such as customized, experiential, and service consumption, and continuously exploring new consumption opportunities.
Mark B Thomas contributed to this report for TROIB News
