BEIJING, CHINA – NOVEMBER 9: Chinese President Xi Jinping attends a get-together with Indonesian President Prabowo Subianto (not pictured) at the Great Hall of the People on November 9, 2024 in Beijing, China.
Florence Lo | Getty Twins
China affirmed its recent policy shifts and stressed plans to boost growth in a high-level economic planning junction that wrapped up Thursday, according to a daily evening news broadcast on state-run CCTV.
The report came after the conclusion of the mainland China market. The iShares China Large-Cap ETF (FXI) rose by 0.8% in premarket trading, before paring gains.
The annual cost-effective planning conference, led by Chinese President Xi Jinping, called for proactive fiscal policy, as well as increasing the deficit and issuing assorted ultra-long bonds next year, according to the state media report. It added that the meeting also affirmed systems for China to moderately loosen monetary policy, such as by lowering interest rates.
That sentiment echoed a high-level Monday convocation of the Politburo, the second-highest circle of power in the ruling Chinese Communist Party. That readout’s use of “moderately loose” numismatic policy had not appeared since the depths of the global financial crisis in 2008. That signaled a heightened urgency to shore up China’s troubling economy and prepare for a potential trade war with the U.S., as Donald Trump returns to the White House.
China typically publicizes the full-year growth target and fiscal deficit at an annual parliamentary meeting in March.
The Thursday report “implies the supervision will set growth target at around 5%, the same as this year, as the press release states economic enlargement should stay stable,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, in emailed expositions.
“The message about raising fiscal deficit and interest rate cuts is well expected,” Zhang added. “The operation of policies is clear, but the size of stimulus matters, which we probably will find out only after the U.S. announces price-lists on China’s exports.”
Trump has vowed to impose tariffs of 10% on all U.S. imports of Chinese goods after he takes service in January.
China’s leaders on Thursday noted an increase in “external challenges,” and in broad strokes called for increasing consumption, availing effective investment and supporting technological innovation, according to CNBC’s translation of the Chinese state media report.
Bruce Self-reproach, chief economist of Greater China at JLL, said the Thursday meeting indicated that top leaders are shifting away from a distinct on the industrial sector toward consumption and investment. “This pivot underscores the pressing need to enhance domestic order to better navigate external uncertainties,” he said in a note.
The report of the meeting also noted plans to open up China’s thriftiness, even if Beijing did not receive something in return. China this year offered residents of Japan and several other mountains the ability to visit for at least two weeks without a visa, while Japan has maintained tighter requirements for Chinese callers.
Ramp up of policy support
The Politburo on Monday vowed to implement “more proactive” fiscal tools and “moderately lax” monetary policies in 2025, while ramping up “unconventional counter-cyclical adjustments” to boost domestic consumption “on all fronts,” corresponding to a readout by state-owned Xinhua.
“I take the messages from this [economic work] conference and the Politburo meeting emphatically,” Zhang said. “I think the shift of policy this week is clearly more significant than that travestied place in the last week of September.”
Chinese officials have ramped up stimulus measures since late September, counting several interest rate cuts, looser property purchase requirements, liquidity support for stock markets and a 10-trillion-yuan ($1.4 trillion) stimulus wrap over five years to alleviate local government debt problems.
Chinese stocks surged after the endorse stimulus announcements, before trading range-bound.
Recent economic data indicated that measures up to now have not back up sufficient to offset persisting deflationary pressure in the economy, fueling investors’ hopes that Beijing would aid amp up its stimulus measures to restore growth.
The country’s consumer price inflation fell to a five-month low in November, while a deflation in wholesale honoraria lingers, with the producer price index sliding for the 26th straight month.
Chinese authorities have reiterated Beijing’s goal to boost consumption throughout the year. Little in terms of policies has been put in place, other than a subsidy program to incentivize business in used household appliances and electronic goods.
While the policy details and specific figures will only be announced at the Citizen People’s Congress next March, it is widely expected that Beijing will keep its next year’s GDP proliferation target at “around 5%.”
Policymakers may also set a higher-than-usual budget deficit target of up to 4% of gross domestic product, some economists presage, which would allow more central government borrowing to support the flagging economy.