Key meeting signals stronger policy support to propel economic growth

BEIJING -- China has signaled adjustment in its macroeconomic approach for 2025, emphasizing stronger measures to stabilize growth and tackle challenges head-on.

A crucial meeting convened on Monday by the Political Bureau of the Communist Party of China (CPC) Central Committee pledged to adopt a more proactive fiscal policy and a moderately loose monetary policy, alongside strengthening unconventional counter-cyclical adjustments and expanding domestic demand on all fronts.

Experts say the meeting highlighted a move toward more robust and efficient macroeconomic measures for 2025, with new policy terms conveying a more proactive stance.

The announcement of a moderately loose monetary policy has drawn widespread attention, marking the first "prudent" to "moderately loose" transition in China's monetary stance since 2011.

In light of changes on both domestic and international fronts, the transition to a moderately loose policy was a step up from the CPC leadership's pledge of impactful interest rate cuts highlighted at a high-level meeting in late September, said Dong Ximiao, chief researcher at the Merchants Union Consumer Finance Company Limited.

Since the beginning of this year, China has witnessed remarkable cuts to its reserve requirement ratio and market-based benchmark lending rates.

Wang Qing, chief macro analyst at Golden Credit Rating, expects the central bank to continue impactful rate cuts and reserve requirement ratio reductions in 2025, alongside a potential decrease in the rates of structural monetary policy tools to lower financing costs for businesses and consumers further.

In tandem with the change in monetary policy, the meeting also underscored movement toward a more proactive fiscal policy. While retaining its established proactive stance, the slight change in wording indicates a stronger policy push for the upcoming year, experts say.

A more proactive fiscal policy in the current context could effectively bolster domestic demand, drive the transformation of growth drivers, stabilize expectations, and defuse risks in key areas such as real estate and finance, said Luo Zhiheng, chief economist at Yuekai Securities.

Monday's meeting also stressed the importance of expanding domestic demand on all fronts, reinforcing the country's continued commitment to revitalizing its super-large market.

China has stepped up efforts to stimulate domestic demand, combining immediate policy measures with structural reforms.

Thanks to these measures -- which include promoting equipment upgrades and consumer goods trade-ins, stabilizing the property market, and addressing local government debt risks -- signs of improvement in domestic demand are beginning to emerge.

Retail sales of consumer goods, one of the main gauges of consumption, rose 4.8 percent year on year in October, accelerating from the 3.2 percent increase seen in September, according to the National Bureau of Statistics.

Growth in the country's fixed-asset investment remained stable for two consecutive months, posting an annual increase of 3.4 percent in the January-October period.

To consolidate the recovery momentum of consumption, it is necessary that we continue driving growth in sectors such as automobiles and home appliances, while upgrading digital and cultural tourism consumption to unlock further domestic demand potential, said Chen Lifen, a researcher at the Development Research Center of the State Council.