head of Central Financial and Economic Commission Office interprets CEWC

A more proactive macroeconomic policy will be implemented in 2025 with a specific plan to be unveiled at the upcoming National People's Congress, says Han Wenxiu 韩文秀 Central Financial and Economic Commission Office deputy director in an authorative interpretation of the Central Economic Work Conference. This is a significant change that is conducive to increasing counter-cyclical regulation, better responding to unstable and uncertain factors in economic operation and providing strong policy support for achieving the annual goals and tasks, meaning 

• a more active fiscal policy through increasing the fiscal deficit rate, issuing long-term special treasury bonds and optimising spending to support key areas while ensuring grassroots financial stability
• a moderately loose monetary policy, including potential interest rate cuts, enhancing liquidity and innovating financial tools to stabilise markets

Han notes that powerful policy combination punches are needed to

• align fiscal, monetary and non-economic policies
• improve policy efficiency from formulation to execution, removing implementation bottlenecks

Action will focus on boosting domestic demand as the main growth driver by

• deepening supply-side reforms for balanced supply and demand
• expanding domestic demand as a long-term strategic move, through addressing demand shortfalls, particularly consumption

Through coordinating and unifying quality improvement and reasonable growth throughout high-quality development and leveraging the vast PRC market, a key aim is to

• develop world-class enterprises and technologies
• enhance economic structure, scale and quality

In the context of increasing uncertainty, the external environment requires more reliance on domestic demand and expanding consumer demand, says Han, noting

• it is necessary to implement special actions to boost consumption, promote income and burden reduction for middle- and low-income groups and enhance consumption capacity
• emerging industries such as first-release economies, ice-snow economies and silver economies will become particularily important
• more efforts will be made to expand the implementation of the
  • 'two new' policies (large-scale equipment renewal and old-for-new for consumer goods)
  • 'two heavy' projects (implementation of major national strategies and construction of security capabilities in key areas)

It is necessary to coordinate the relationship between an effective market and an effective government to form an economic order that is 'both active and controllable', Han stresses. The more standardised government behavior, the more effective the market role, he says, noting

• the government should focus on continuously building a rule-of-law-based economy and a credit-driven economy, enhancing market regulations and setting an example by adhering to these rules
• its efforts should prioritise correcting market failures, standardising competitive practices, fostering a unified national market and ensuring that this unified market becomes a robust platform for fair competition among all types of business entities
• the government should avoid unwarranted intervention in the activities of microeconomic entities, refrain from engaging in local protectionism and prevent the formation of insular, self-contained economic cycles

PRC economic policy in 2025 will also centre on

• rectifying 'involutionary' competition and promoting the long-term, sustained and healthy development of advantageous industries
• improving the multi-level financial service system, making greater efforts to attract social capital to participate in venture capital to gradually cultivate innovative enterprises
• promoting the integrated development of scitech innovation and industrial innovation
• accelerate the use of advanced and cutting-edge technologies to transform and upgrade traditional industries
• revitalising idle and inefficiently used industrial park, leveraging local government bonds and refinancing tools to unlock development potential