China's economic trajectory in 2025: Precise macroeconomic policies, optimized industrial layout and unleashed demand drivers

Editor's note: Liu Chunsheng, a special commentator on current affairs for CGTN, is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinion and not necessarily the views of CGTN.

As the annual sessions of the National People's Congress (NPC) and Chinese People's Political Consultative Conference (CPPCC) are approaching, the focus of all sectors is on China's economic trajectory in 2025. 

The Central Economic Work Conference has set the priorities for economic and social development for 2025, clearly stating the need to "maintain stable economic growth," prioritizing stable growth, employment and prices amid a globally complex and increasingly uncertain economic landscape. 

In this context, stabilizing economic growth is crucial for laying a solid foundation for development.

In 2025, the precise implementation of China's macroeconomic policies will serve as a critical safeguard for stable economic growth. The Central Economic Work Conference emphasized implementing a more proactive fiscal policy and a moderately loose monetary policy, setting the tone for economic work in 2025.

On the fiscal front, the conference proposed to "implement a more proactive fiscal policy," indicating that future measures will be more proactive, effective and purposeful. 

Currently, China's overall government debt-to-GDP ratio stands at 67.5 percent, significantly lower than the global average, providing room for increasing the deficit ratio and expanding fiscal expenditures.

In 2025, the deficit ratio is expected to rise, with stronger fiscal support for high-tech industries and strategic emerging industries through government bonds, in order to push for industrial structure optimization and high-quality economic development. 

Simultaneously, local government bonds, used to replace hidden debts and increase investment in education, healthcare, housing and other people's livelihood sectors, will gradually expand. This will also enhance public service quality and residents' well-being and consumption capacity.

Regarding monetary policy, the conference advocates for a "moderately loose monetary policy," ending the "prudent" stance maintained for 14 years. 

Timely reserve requirement ratio (RRR) cuts and interest rate reductions, maintaining ample liquidity, will be the main theme of monetary policy in 2025. 

Against the backdrop of major European and American economies initiating interest rate cuts, the timing for China to reduce its RRR and interest rates is appropriate and will help lower the comprehensive financing costs for the real economy, stimulate market demand and vitality, expand domestic demand and promote household consumption.

Additionally, the conference proposed to explore the expansion of the macroprudential and financial stability functions of the central bank, develop new financial instruments and maintain financial market stability, thereby enhancing the economy's resilience against risks amidst increasing global uncertainties.

In 2025, the optimized adjustment of China's industrial layout will serve as a key driver for high-quality economic development. 

In recent years, with changes in domestic and international economic conditions, China's economy is undergoing a transition from old to new growth drivers. Against this backdrop, optimizing the industrial layout and promoting high-quality development have become inevitable choices.

On the one hand, traditional industries need to accelerate their transformation and upgrading, improve production efficiency and product quality to adapt to shifting market demands. Through technological and management innovation, traditional industries will evolve towards intelligent and green development, enhancing their position and competitiveness in the global industrial chain.

On the other, new industries will emerge as new engines driving economic growth. Rapidly growing sectors such as the artificial intelligence industry represented by DeepSeek, the humanoid robot industry represented by Unitree Robotics and the low-altitude economy represented by drones, not only have immense market potential but can also drive the development of related industrial chains, forming new forces driving economic growth. 

To facilitate the rapid development of emerging industries, policy support and capital investment need to be increased, with related infrastructure and supporting services improved. 

Simultaneously, international cooperation and exchanges in advanced technology should be strengthened to enhance independent innovation capabilities.

Furthermore, the optimized adjustment of the industrial layout should emphasize coordinated regional development. 

By optimizing regional industrial layouts, a regional economic pattern of complementary advantages and coordinated development can be formed. 

Greater support should be given to China's central and western regions to accelerate their industrial transfer and upgrading, narrowing the gap with eastern regions and helping achieve balanced national economic development.

Activating domestic demand drivers is crucial for stabilizing economic growth. Consumption and investment, as the two major components of domestic demand, will jointly propel China's sustained economic growth.

In terms of consumption, with the increase in residents' income levels and upgrading of consumption structures, consumer demand will become an important force driving economic growth. 

To stimulate consumer demand, richer and more powerful consumption-promotion policies will need to be introduced. 

For instance, by lowering consumption taxes, raising personal income tax thresholds, among other measures, residents' disposable income can be increased.

By optimizing the consumption environment and improving service quality, consumers' confidence can be enhanced. 

Meanwhile, attention should be given to sluggish sectors such as catering and corporate consumption, by introducing measures to achieve faster growth.

Regarding investment, greater emphasis should be placed on the quality and efficiency of investment. 

Through enhanced top-down organizational coordination, greater support will be given to the "two key" projects (referring to major infrastructure and major industrial projects); the scale of central budget investment will be appropriately increased; and fiscal and monetary policies will be better coordinated to effectively leverage government investment to drive social investment. 

Additionally, investment opportunities in emerging industries should be prioritized, with increased investment in high-tech and strategic emerging industries to facilitate their rapid development.

Furthermore, by deepening reform and opening-up, and optimizing the business environment, market vitality and social creativity can be stimulated. 

Barriers to market entry should be lowered, and the legitimate rights and interests of foreign-invested enterprises should be protected, enhancing the appeal of the "Invest in China" brand. 

By expanding high-level opening-up, foreign trade and investment will be stabilized, thereby injecting new growth momentum into China's economy.

(Cover via VCG)