What are the key focuses of China's economic work in 2025?

China's annual Central Economic Work Conference was held from Wednesday to Thursday in Beijing, highlighting the need to adopt a more proactive fiscal policy and a moderately accommodative monetary policy, as well as expand domestic demand on all fronts.

It was decided at the meeting that the country should adopt a more proactive fiscal policy and set a higher deficit-to-GDP ratio, and it should ensure that its fiscal policy is continuously forceful and more impactful. It was also determined that a moderately accommodative monetary policy should be implemented, with reductions in the reserve requirement ratio and interest rates at an appropriate timing to ensure ample liquidity. Better coordination was called for between fiscal, monetary, employment, industrial, regional, trade, environmental and regulatory policies and the country's reform and opening-up measures. 

What do a "more proactive" fiscal policy and a "moderately accommodative" monetary policy really mean? And how can domestic demand be expanded on all fronts? Experts have shared their insights on the key areas.

More proactive fiscal policy

The importance of a more proactive fiscal policy in 2025's economic work was stressed at the meeting. Experts said this signals stronger policy support is likely in the year ahead.

"To be more proactive means to make full use of the favorable and positive factor of China's fiscal policy space," Yang Zhiyong, head of the Chinese Academy of Fiscal Sciences, told China Media Group (CMG).

Noting that China's deficit-to-GDP ratio is currently relatively low, Yang said increasing the ratio can raise more funds to promote consumption and investment, and expand domestic demand, thereby providing stronger policy support for the country's economic growth.

Experts also said plans for a "more proactive" fiscal policy demonstrates the continuity and stability of fiscal policy, and it is a "forward effort" on the basis of this year's proactive fiscal policy.

Luo Zhiheng, chief economist at Yuekai Securities, told CMG the issuance and implementation of a package of fiscal policies in advance is expected to help expand aggregate demand.

Yang added that making good use of the fiscal policy tools will promote the realization of policy goals.

"For example, this year, China's raising of the ceiling on local government special-purpose bonds is conductive to the increase of independent financial resources of local governments," he said, adding that it will also be beneficial to securing people's basic livelihoods, salaries for the public sector and government's operation at the grassroots level.

Moderately accommodative monetary policy

Experts noted that it was decided the monetary policy in 2025 would be moderately accommodative, based on the analysis of the current economic situation and fully considering external uncertainties, and combined with the planning for next year's economic work.

Dong Ximiao, chief researcher at the Merchants Union Consumer Finance Company Limited, told CMG the decision further sends a positive and clear signal, and will boost the confidence of all parties and stabilize market expectations.

A moderately accommodative monetary policy also represents a supportive monetary policy stance, which will continue to reduce the comprehensive financing costs of enterprises and residents, the chief researcher said.

Noting that reductions in the reserve requirement ratio and interest rates at an appropriate time to ensure ample liquidity were also called for, Dong said interest rates will maintain at a low level and the credit environment will be fully optimized.

He added the policy approach will open the door to more investment in areas such as scientific and technological innovation, green development and consumer finance to better stimulate the power and innovative vitality of the whole of society.

Expanding domestic demand

"Vigorously boosting consumption, improving investment efficiency and expanding domestic demand on all fronts" was the first of nine key tasks identified at the meeting for next year's economic work.

It was decided that a special campaign dedicated to stimulating consumption should be implemented, and efforts should be made to increase the incomes and alleviate the burdens of low- and middle-income groups.

The special consumption campaign is likely to be especially impactful, according to Liu Yuanchun, president of the Shanghai University of Finance and Economics.

"In the past, we did not have such a campaign to expand consumption, especially a unified national one," Liu told CMG, adding that the proposal means more efforts and more policy tools are needed to expand and boost consumption.

Efforts to promote large-scale equipment upgrades and consumer goods trade-in programs with greater intensity and scope, and develop the "debut economy," "ice and snow economy," and "silver economy" were also called for at the meeting. 

Li Chengjian, a researcher from the Development Research Center of the State Council, was quoted by Xinhua as saying that as the effects of the trade-in programs and a package of incremental policies gradually emerge, consumption of products such as automobiles, home appliances and furniture has rebounded rapidly.

It is imperative to continue to consolidate the momentum of recovery in consumption, actively cultivate new engines such as customized consumption, experience consumption and service consumption, and continuously expand new consumption space, he added.