Guangzhou (JLC), December 13, 2024 – China’s top leaders have again set the tone for next year’s economic work at the annual Central Economic Work Conference, which was held from Wednesday to Thursday in Beijing.
The Central Economic Work Conference followed a CPC Politburo meeting held on Monday.
China is about to achieve its social-economic growth targets, according to the conference, suggesting that China is well on track for the 2024 GDP target of around 5%.
Next year, China should maintain steady economic growth, keep employment and prices generally stable, and ensure residents' incomes grow in tandem with the economy, state-run news agency Xinhua reported, citing a readout of the conference.
China should also adopt a more proactive fiscal policy and a moderately loose monetary policy, among other supportive measures, to achieve a stable growth while coping with external challenges.
Fiscal policy: from “proactive” to “more proactive”
China should implement a more proactive fiscal policy and set a higher deficit-to-GDP ratio for 2025, Xinhua reported, citing a readout of the meeting.
The deficit-to-GDP was set at 3% for 2024, with the deficit amounting to about CNY4.06 trillion, JLC previously reported. (see China sets GDP growth target at around 5% for 2024)
China’s CITIC Securities forecast a deficit-to-GDP ratio of 4% for 2025, based on a GDP growth forecast of still around 5%.
Next year, China should also increase the issuance of ultra-long special treasury bonds and local government special-purpose bonds, according to the meeting.
For 2024, China has issued a total of CNY1 trillion of ultra-long special treasury bonds. The scale of local government special-purpose bonds was set at CNY3.9 trillion this year, JLC previously reported.
CITIC Securities predicted that special treasury bond issuance could reach CNY2-3 trillion in 2025, while that of local government special-purpose bonds could exceed CNY4 trillion.
Monetary policy: from “prudent” to “moderately loose”
A moderately loose monetary policy should be implemented, with reductions in the reserve requirement ratio (RRR) and interest rates at an appropriate timing to ensure ample liquidity, Xinhua reported.
The last time China used "moderately loose" to describe its monetary policy was in 2008-2010, official data showed.
In terms of interest rates, China has cut the 7-day reverse repo rate – a key policy rate – by 30 basis points (bps) so far in 2024, official data showed.
CITIC Securities expected that China could cut the rate by another 40-50 bps in 2025.
Meanwhile, China has cut the RRR by a combined 100 bps so far in 2024, releasing long-term liquidity of around CNY2 trillion, official data showed.
Minsheng Securities anticipated that the RRR could be down by another 150 bps next year.
On consumption and real estate market
The meeting urged efforts to vigorously boost consumption, improve investment efficiency, and expand domestic demand on all fronts, Xinhua reported.
The large-scale equipment upgrades and consumer goods trade-in programs should be promoted with greater intensity and scope, and active efforts should be made to develop debut economy, ice and snow economy and silver economy, it said.
China should also step up efforts to stabilize the real estate market, according to the meeting.
