Interpreting China's Central Economic Work Conference

Editor's note: Zhang Xiaoxi is an associate research fellow of the Economic Growth Research Department, Institute of Economics, Chinese Academy of Social Sciences. The article reflects the author's opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.

China's Central Economic Work Conference was held in Beijing from Monday to Tuesday this week (December 11-12). The conference systematically reviewed China's economic work in 2023 and provided directional guidance for economic development in 2024.

Stability remains the top priority for the overall work plan for 2024. Officials at the conference stressed the need for policies that "stabilize expectations, growth and employment." The growth model in the past – dependent on real estate, infrastructure and leveraged investments – is unsustainable. Because of the ongoing pressure on the real estate market and the possible spillover effects on local governments, overall demand still faces pressure. To completely break free from the debt-deflation spiral and ensure stable economic development, it is essential to sustain domestic consumption to promote economic structural rebalancing, restructure the balance sheets of struggling industries to guard against the "risk associated with risk disposal," implement reforms in state-owned enterprises and finance, and help the private sector regain confidence.

Unlike the previous main emphasis on stability, this year's conference proposes "seeking progress while maintaining stability" and "actively pursuing progress." It underscores "seeking progress while maintaining stability, promoting stability through progress, and establishing new institutions before dissolving the old." Within the overarching framework of focusing on the central task of economic development and the primary mission of high-quality development, policies for 2024 will incline toward expansion. China's economy is expected to experience moderate growth, with the actual GDP maintaining a positive trajectory and the annual growth target reaching above 5 percent.

Both monetary and fiscal policies exhibit characteristics of "stability and progress." Monetary policies aim to be "prudent," transitioning from an emphasis on being "powerful" to now highlighting "effectiveness." There is more emphasis on the rationality, objectives and structure of policies. Meanwhile, fiscal policies take on an "proactive" stance, proposing enhancements that are "moderate." It is foreseeable that China's fiscal deficit rate in 2024 will likely be maintained above 3 percent. Following the issuance of trillions of yuan in treasury bonds at the end of this year, it is highly probable that special treasury bonds will be issued again next year.

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