Policymakers reaffirm need to forge ahead with high-quality development in 2025

Xi Jinping, general secretary of the Communist Party of China Central Committee, Chinese president and chairman of the Central Military Commission, delivers an important speech at the annual Central Economic Work Conference in Beijing, capital of China. The conference was held from Wednesday to Thursday in Beijing.

In setting priorities for its economic policy for 2025, China is emphasizing the need to maintain stable growth, employment and commodity prices through steps including higher deficit-to-GDP ratios, the issuance of ultra-long-term special treasury bonds and interest rate cuts.

The nation's policymakers set the policy agenda for the world's second-largest economy at the annual Central Economic Work Conference in Beijing on Wednesday and Thursday.

President Xi Jinping, who is also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, analyzed the performance of the economy and mapped out economic plans for 2025 at the conference.

While noting heightened negative factors from the outside environment and challenges now facing the economy, policymakers reaffirmed the need to forge ahead with high-quality development, comprehensively deepen reform, expand high-level opening-up and develop a modern industrial system.

They pledged to implement more proactive and effective macroeconomic policies, boost domestic demand, drive the integration of sci-tech innovation and industrial innovation, and stabilize the real estate sector and stock markets.

The nation will maintain basic equilibrium in the balance of payments and better synchronize the income growth of residents and economic growth, they added.

The meeting reaffirmed the need to adopt a moderately loose monetary policy next year, including the rollout of rate cuts and cuts in the reserve requirement ratio at an appropriate time to ensure ample liquidity.

The policy stance is aligned with signals from a tone-setting meeting on Monday of the Political Bureau of the CPC Central Committee, which fueled expectations that Beijing will provide additional rate cuts and adopt an expansionary fiscal policy in 2025 to boost demand.

"China's policy rates remain above the zero bound, suggesting there's still room for further rate cuts," Betty Wang, lead economist with British think tank Oxford Economics, wrote in a research note, referring to the lower limit that rates can be cut to.

"The People's Bank of China is also exploring 'unconventional' measures to expand its balance sheet," she added.

Xi Jinping, general secretary of the Communist Party of China Central Committee, Chinese president and chairman of the Central Military Commission, delivers an important speech at the annual Central Economic Work Conference in Beijing, capital of China. The conference was held from Wednesday to Thursday in Beijing. [Photo/Xinhua]
Meanwhile, the boosting of domestic demand was highlighted at the conference as a top priority for next year, as policymakers pledged to roll out more initiatives to boost consumption, including greater strides in equipment upgrading and consumer goods trade-in programs.

Wang said in her note that she expects that the expansion of trade-in programs would contribute approximately 1 percentage point to overall retail sales growth next year.

The development of new quality productive forces through sci-tech innovation was underlined at the conference, with authorities set to launch an Artificial Intelligence Plus initiative and foster more emerging sectors.

The nation will ensure the implementation of landmark reform measures, including enacting a new law promoting the private economy, standardizing business-related law enforcement, and making guidelines on establishing a unified national market.

In expanding high-level opening-up, the policymakers reaffirmed commitments to stabilize foreign trade and the inflow of foreign investment, and to take proactive steps to further open up and expand institutional opening-up in a steady manner.

China will proactively develop trade in services, green trade and digital trade, while steadily opening up its services sector, they said.

Minister of Commerce Wang Wentao said in a televised interview on Thursday that the boosting of consumption will be a pillar for economic growth next year. "We will promote the growth of trade in services through greater opening-up, in order to stabilize foreign investment," he said.

Other key measures highlighted at the conference include the prevention and defusing of risks in key sectors to ensure that no systemic risks will arise.

The nation will make sustained efforts to stabilize the real estate market and halt its decline, intensify the redevelopment of urban villages and dilapidated housing, and promote the establishment of a new development model for the real estate sector.

The conference also pledged to prudently address risks associated with small and medium-sized financial institutions at local levels.

It called for heightened efforts to promote urban-rural integration, ensure that the total area of China's farmland remains above the specified red line, and guarantee the steady production and supply of grain and key agricultural produce.

The policymakers reiterated the necessity of taking concerted steps in cutting carbon emissions, reducing pollution, and pursuing green development to accelerate the green transition of socioeconomic growth.

China is set to make greater efforts in guaranteeing and improving public well-being next year, with actions to be launched for supporting the creation of jobs in key sectors, in urban and rural areas, and by small, medium-sized and micro businesses, according to the conference.

An initiative to build up the foundation of the healthcare sector and more policies to encourage childbirth are also in the pipeline, the policymakers said.