China to intensify policy support for economic growth in 2025

China on Monday announced a more proactive fiscal policy and a moderately loose monetary policy that have buoyed market sentiment and ignited optimism for the year ahead.

At the meeting of the Political Bureau of the Communist Party of China Central Committee, China's top leaders outlined a series of policies to bolster economic growth. Key measures include boosting consumer spending, improving investment efficiency and promoting high-level opening up.

A-shares opened higher on Tuesday morning. The Shanghai Composite Index rose 2.58 percent, the Shenzhen Composite Index gained 3.66 percent, and the ChiNext Index surged 4.88 percent.

CGTN interviewed economists and analysts to gauge the country's 2025 economic outlook.

The phrase "strengthening extraordinary countercyclical adjustments" is a first-time mention, indicating the government's strong determination to stabilize growth, Zhang Jun, chief economist of China Galaxy Securities, commented.

"'Moderately loose' monetary policy is the most relaxed monetary stance, typically seen during financial crises," Zhang noted. The last time it was mentioned was in 2009 and 2010.

China Galaxy Securities expects China's central bank to implement more aggressive rate cuts and reserve requirement ratio reductions，specifically, a cumulative 40-60 basis point reduction in policy rates and a 150-250 basis point reduction in the reserve requirement ratio for the year ahead.

A focus on domestic demand

UBS Chief China Economist Wang Tao expects a modest increase in consumption support measures in the year ahead, including the expansion of the trade-in scheme for appliances and increased government spending in social areas.

The bank also expects China to implement structural reforms to boost business confidence and social welfare. Specifically, Wang noted that social safety net reforms including increased coverage of serious illness insurance, systematic increase of payout level and government contribution in urban-rural resident pension, and better public service provision for rural areas and migrant workers would help boost confidence and consumption.

China has made strides in tackling real estate woes. The market has shown signs of stabilization. Zhang pointed out the main hurdle is balancing market stabilization via housing stockpiling with local debt risks, especially in small cities with weaker demand and higher debt levels. Zhang added that central government intervention is crucial, such as implementing centralized commercial housing stockpiling policies that bypass local debt quotas or excluding local special stockpiling debts from debt ratio calculations.

The tariffs threat

US president-elect Donald Trump has threatened to impose a 60 percent tariff on products imported from China. Economists have suggested strategies to mitigate the negative impact and promote a more equitable global trade system.

Su Jian, director of the National Center for Economic Research at Peking University, suggested that China should prioritize stabilizing the US market for Chinese businesses and explore alternative strategies, such as improving management and technical efficiency, to reduce costs. 

Zhang suggested the provision of targeted financial support, such as special loans, to sectors heavily impacted by the tariffs. Other measures include deepening cooperation with the European Union in areas like climate energy and industrial finance to reduce the influence of US protectionist policies, enhancing economic and trade ties with the Belt and Road partner countries, and utilizing China's large domestic market to attract foreign investment, while creating a more favorable business environment.

China's economic growth is expected to have a positive spillover effect on the global economy, particularly in Asia.

"China's recovery will create opportunities for other Asian economies by boosting intra-regional trade," said Raymond Ma, chief investment officer of the Chinese mainland and Hong Kong at Invesco.

He also predicts that leading Chinese companies will expand globally in 2025, leveraging their competitive advantages and extensive distribution networks to deliver products efficiently.