China to adopt more proactive macro policies, expected to boost demand and drive growth in 2025: Experts

The plan to adopt more proactive macro policies was highlighted at the annual Central Economic Work Conference held in Beijing from Wednesday to Thursday, among other key economic priorities. Experts have positively evaluated the policy plan, saying it will revitalize market confidence, drive demand and make way for sustained economic growth next year.

China will adopt a "moderately loose" monetary policy and lower the reserve requirement ratio and interest rates when necessary to ensure adequate liquidity, according to the conference.

This marks the first "prudent" to "moderately loose" transition in the country's monetary stance after 14 years, observed Liu Yuanchun, president of Shanghai University of Finance and Economics.

This will effectively and significantly enhance banks' lending capacity, reduce borrowers' interest payment burdens, and more importantly, ensure ample liquidity, he said.

The meeting laid out comprehensive plans for various policy tools, including fiscal deficits, government spending, ultra-long-term special treasury bonds, and special-purpose bonds.

Shi Yinghua, a researcher at the Chinese Academy of Fiscal Sciences, noted that these measures, which aim to deliver both immediate benefits and long-term gains, will help enhance counter-cyclical adjustments and mitigate external uncertainties.

The need to vigorously boost consumption, improve investment efficiency, and expand domestic demand across all sectors was placed at the forefront of next year's economic agenda. Experts believe that a more proactive and robust fiscal policy will play a key role in achieving these goals.

Luo Zhiheng, chief economist at Yuekai Securities, pointed out that the fiscal policy package is expected to produce effects early on, which will better stimulate aggregate demand.

The relatively low fiscal deficit ratio at present allows greater leeway for the implementation of fiscal policies, said Yang Zhiyong, director of the Chinese Academy of Fiscal Sciences. Raising the fiscal deficit ratio would generate more funds to drive consumption, stimulate investment, thereby expanding domestic demand and offering stronger policy support for the sustained recovery and growth of the economy, he added.

On how to better leverage fiscal policy tools to achieve China's growth target of around 5 percent next year, an analysis by the China Finance 40 Forum suggests raising the fiscal deficit ratio for 2025 to 4 percent, issuing 2 trillion yuan ($275 billion) in new long-term special treasury bonds, 3.9 trillion yuan in new special-purpose bonds, and utilizing 400 billion yuan in surplus funds.