Robust policy support and powerful domestic demand drive China's economy to thrive

Editor's note: Liu Chunsheng is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinions and not necessarily the views of CGTN.

Data reveals steady growth in China's economy

Amid a complex and volatile global economic landscape, China's economy is steadily advancing to new growth phases, supported by a series of robust policies and a powerful domestic demand market. Data shows that in April, the added value of industrial enterprises above the designated size nationwide grew by 6.1 percent year-on-year, with the added value of the equipment manufacturing industry increasing by 9.8 percent and that of high-tech manufacturing by 10 percent. Production of 3D printing equipment, industrial robots, and new energy vehicles rose by 60.7 percent, 51.5 percent, and 38.9 percent year-on-year, respectively. China's total retail sales of social consumer goods reached 3.7174 trillion yuan ($515.3 billion), a year-on-year increase of 5.1 percent. The just-concluded May Day holiday was a grand consumption feast, fully demonstrating the enormous potential of China's domestic demand. Notably, the number of payment transactions and the amount spent by overseas visitors increased by 244.86 percent and 128.04 percent respectively compared to the same period last year. This not only reflects the vitality of the domestic consumer market but also highlights China's growing attractiveness to international tourists, further expanding the boundaries of the consumer market. 

Favorable policies ignite market potential 

Beyond the impressive data, a series of recent policy dividends have injected strong momentum into economic growth. On May 7, 2025, the People's Bank of China announced a 0.5 percentage point reduction in the reserve requirement ratio, injecting approximately 1 trillion yuan ($138.6 billion) of long-term liquidity into the banking system, and a 0.25 percentage point cut in the personal housing provident fund loan interest rate. These policy combinations aim to boost the recovery of the real economy and the stable and healthy development of the real estate market, supporting the release of rigid and improved housing demand. They are of great significance for stabilizing the overall economy and driving the development of related industries. 

At the macro policy level, the Central Economic Work Conference proposed that in 2025, a more proactive fiscal policy will be implemented, with increased issuance of ultra-long-term special treasury bonds to continuously support the implementation of "two key" projects and "two new" policies. This initiative will effectively drive investment growth, advance the implementation of national major strategies and key areas, and promote industrial and consumption upgrades. By increasing investment in infrastructure, technological innovation, and other fields, it will not only create numerous employment opportunities but also enhance the quality and efficiency of economic development, providing sustained momentum for domestic demand. 

Domestic demand potential supports annual growth target 

Despite the complex external environment, China's strong domestic demand is expected to be a key force supporting the annual growth target of 5%. As one of the "three carriages" driving economic growth, consumption is playing an increasingly important role in China's economy. With the improvement of residents' income levels, the optimisation of the social security system, and the continuous upgrading of the consumption environment, residents' consumption capacity and willingness will continue to rise.

In terms of investment, the advancement of "two key" projects will drive large-scale infrastructure and industrial upgrading investments. For example, in promoting high-level scientific and technological self-reliance, investment in technological innovation will boost the development of related industries and foster new economic growth points. In promoting regional coordinated development and urban-rural integration, infrastructure investment will improve regional development conditions, narrow regional gaps, and further expand economic development space. Meanwhile, the implementation of "two new" policies will encourage enterprises to increase equipment renewal investments, improve production efficiency, and promote industrial structure optimization and upgrading. 

Improved external environment aids China's economic growth 

Notably, recent breakthroughs in China-US trade negotiations have brought positive changes to the external environment for China's economic development. With the progress of the negotiations, foreign trade pressures have eased, and a significant export rush effect is expected in the next three months, which will strongly support economic growth in the second quarter and throughout the year. As the world's two largest economies, improved trade relations between China and the US will help stabilize global industrial and supply chains, creating a more favorable market environment for Chinese export enterprises. Export growth will not only directly drive economic growth but also promote the development of related industries, increase employment opportunities, and form a virtuous cycle of economic growth. 

Furthermore, with the continuous advancement of China's opening-up policy, its capacity to attract foreign investment has been continuously enhanced. More and more foreign financial institutions are increasing their investments in the Chinese market, which not only brings financial support to China's economic development but also introduces advanced management experience and technologies. This helps enhance the competitiveness of Chinese enterprises and promotes high-quality economic development.