Liu Xiaoguang：Improving indicators say China gains new momentum

LiuXiaoguang, Professor, Institute of National Development and Strategy, Renmin University of China, Key Member of CMF

This article is reprinted from the March 24 issue of Global Times.

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Latest economic statistics showed that in the first two months of this year, China's industrial, services, consumption and investment indicators all experienced faster year-on-year growth. The National Bureau of Statistics said that economy has kicked off on a stable note this year.

This stability arises from the ongoing economic recovery that began in the fourth quarter of last year and is expected to continue. China introduced a series of incremental policies starting in late September and the economy experienced a rebound in the fourth quarter, successfully meeting the annual GDP growth target of 5 percent.

Recent policy enhancements following the Two Sessions are bolstering domestic demand and economic activity, which is expected to help Chinese economy mitigate the impacts of external uncertainties, including tariff hikes and global economic fluctuations.

Even in the face of increasing external adverse influences, the momentum of China's economic development remains stable. Guided by the growth target of about 5 percent set in the Government Work Report, along with macro policy support, China's economy is likely to gain pace. It is reasonable to keep optimistic about the world's second-largest economy.

The key orientations of China's economic policy in 2025 include: a more proactive fiscal policy, an appropriately accommodative monetary policy, and a priority on expanding domestic consumption and highlighting high-quality development through innovation.

Despite uncertainties in the external environment, through policy support and the enhancement of domestic demand, China's economy is expected to achieve a robust and high-quality growth.

In terms of a more proactive fiscal policy arrangement, the deficit-to-GDP ratio in 2025 has been set at about 4 percent, an increase of one percentage point from a year earlier. The government budget deficit is set at 5.66 trillion yuan ($780 billion).

According to the Government Work Report, a total of 1.3 trillion yuan of ultra-long special treasury bonds, 500 billion yuan of special treasury bonds and 4.4 trillion yuan of local government special-purpose bonds will be issued this year.

By all metrics, fiscal policy in 2025 is expected to act more proactively, with a focus on concentrated efforts in the second and third quarters this year to consolidate the momentum of economic recovery.

In terms of monetary policy, the Government Work Report proposed a moderately loose monetary policy, which is the strongest policy signal in the past decade, indicating that monetary policy will become more proactive.

The pace of interest rate cuts by the US Federal Reserve may bring some complexities into China's monetary policy implementation, but it will not affect the effectiveness of the People's Bank of China's rate cuts and other regulatory measures.

For this year, expanding domestic demand has been put as the top primary task, with a focus on boosting consumption and investment returns.

In the past, policies have focused on stimulating demand through increasing investment; however, in 2025, there would be a stronger emphasis on boosting domestic consumption and market demand. Moreover, in the face of the impact of US tariff hikes, expanding domestic demand is a key strategic move to cope with the uncertainties of external demand.

Looking ahead, China's economy is expected to showcase more highlights of high-quality development driven by vigorous scientific research and technological innovation, which will lay a solid foundation for sustainable economic growth.

With the dual support of government policy and market vitality, China's economy is expected to take more solid steps on the path of high-quality development in 2025, and continue to contribute to global economic growth.

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