China Prepares Annual Economic Meeting to Address Stimulus and Growth in 2025

China Prepares Annual Economic Meeting to Address Stimulus and Growth in 2025

China is set to commence its highly anticipated annual Central Economic Work Conference on Wednesday. This two-day event will set the stage for economic policies in 2025, as Beijing navigates the challenges of stimulating growth amid potential trade tensions with the US.

Date: December 10, 2024
Source: Bloomberg News

Key Highlights:

• Economic Agenda for 2025: Policymakers to outline strategies for economic growth and potential stimulus measures.
• Growth Target: Analysts predict a 2025 growth goal of approximately 5%, similar to 2024's target.
• Focus Areas: Boosting domestic demand, addressing property market challenges, and managing external risks like trade tariffs.

Conference Goals:

The Central Economic Work Conference will convene top leaders, provincial officials, and heads of financial institutions to shape China’s economic priorities for the coming year.

Fiscal and Monetary Policies:

The Politburo has revived “moderately loose” monetary policies and “more proactive” fiscal tools reminiscent of the 2008 financial crisis. This shift signals stronger support for growth, potentially through higher government spending and targeted stimulus.

Growth Target and Challenges:

Economists at UBS and Citigroup expect the government to aim for a 5% growth target in 2025. However, achieving this goal will be challenging amidst weakening domestic demand and rising geopolitical tensions, including proposed US tariffs of up to 60% on Chinese goods.

Key Economic Priorities:

1. Boosting Consumption:
   With much of the previous stimulus focused on infrastructure and production, Beijing may pivot towards policies that stimulate consumer demand. This includes addressing challenges in the property market and increasing disposable income.

2. Fiscal Policy Adjustments:
   Analysts anticipate a potential budget deficit target of up to 4% of GDP, enabling greater central government borrowing to fund stimulus programs.

3. External Risks and Trade Tensions:
   President Xi Jinping emphasized the importance of stable US-China relations amid tariff threats. The conference will likely explore strategies to mitigate external risks and ensure sustainable growth.

Expert Insights:

Chang Shu, Chief Asia Economist at Bloomberg Economics:
“We expect policymakers to signal a commitment to bolstering growth measures. A 2025 growth goal close to 2024’s target of 5% would suggest stronger policy support ahead.”

Xiangrong Yu, Citigroup Economist:
“While fiscal policies will likely be expansionary, initial measures may be modest. Further support could follow if growth falters or external risks escalate.”

Xi Jinping’s Perspective:

President Xi has recently projected confidence in China’s economic stability and progress. However, he remains concerned about global decoupling and trade conflicts, urging dialogue and cooperation with Washington to foster stable relations.

“Trade wars and tariff disputes defy economic logic and have no winners,” Xi remarked during recent meetings with international financial leaders.

Bottom Line:

China’s annual economic work meeting will provide critical insights into how policymakers aim to navigate domestic and global challenges in 2025. Investors and analysts will be watching closely for signals on fiscal and monetary policy adjustments, growth targets, and strategies to bolster the economy amidst trade tensions.

Stay tuned for updates as Beijing’s policy blueprint unfolds.