China has announced plans to boost its budget deficit, increase borrowing, and implement looser monetary policies to support stable economic growth amidst escalating trade tensions with the United States. The decision was made during the Central Economic Work Conference, an annual meeting of China's top leaders held on December 11-12.
The country's economy is facing challenges such as a property market crisis, high local government debt, and weak domestic demand. With exports under threat from potential higher US tariffs, China is taking proactive steps to mitigate the impact of external uncertainties.
The government has pledged to maintain the stability of the exchange rate and adopt a more accommodative monetary policy stance. This shift in strategy reflects a focus on prioritizing growth over financial risks, according to analysts.
Key measures outlined in the meeting include increasing the budget deficit, issuing more debt at both central and local government levels, reducing bank reserve requirements, and timely interest rate cuts. These actions are aimed at stimulating economic activity and preventing a sharp decline in growth.
While specific growth targets for the coming year have not been officially disclosed, experts anticipate challenges in achieving a 5% growth rate in 2025 due to external pressures. However, with adequate stimulus measures in place, a significant downturn is not expected.
Amid concerns over the impact of US tariffs on Chinese exports, the government is looking to boost domestic consumption as a new growth driver. Efforts to increase household incomes, expand subsidy schemes, and raise pensions are part of the strategy to encourage consumer spending.
Analysts suggest that a focus on bolstering consumption could help offset the potential negative effects of reduced exports and support overall economic resilience. The government's commitment to enhancing consumer confidence and promoting spending is seen as a positive signal for the markets.
