Chen Wenling, Chief Economist at the Beijing-based China Center for International Economic Exchanges, said that in the final quarter of the year, China's top priority is to stabilize investment, boost consumption and keep market players afloat, in order to maintain a positive outlook among businesses and households, and support economic recovery. “Scaling up effective investment should remain high on the government work agenda, as it is a crucial lever to shore up market confidence and support the economic recovery during this challenging period,” Chen said in an exclusive interview with China Daily. The National Development and Reform Commission (NDRC) said that the government will front load CNY100 billion in spending from its budget for 2025 in addition to another CNY100 billion for key construction projects. The NDRC said it will issue investment plans and projects for the CNY200 billion by the end of this month to achieve progress as soon as possible.
The government’s policy tool kit, including measures such as increased investment, is not just a short-term fix, but a clear signal of its long-term commitment to the country’s sustainable and healthy development, Chen said. With the government’s emphasis on investment made clear, Chen said it is equally crucial for policy-makers to focus on reviving consumer demand to achieve a balanced and sustainable recovery. According to the National Bureau of Statistics (NBS), final consumption expenditure contributed 82.5% to China’s economic growth in 2023, cementing its position as the primary driver of the country’s economic expansion. “Consumption has become the linchpin of China’s economic expansion, and it is only natural that fiscal policy now prioritizes measures to bolster consumer demand,” Chen said, adding that China’s fiscal policy will support the country’s long-term economic well-being and reversing short-term unfavorable sentiment. By implementing measures to reduce the financial pressures on middle and low-income households, such as through tax relief and targeted subsidies, policymakers can enable a more rapid and robust increase in consumer spending, Chen said. This demographic is more responsive to changes in their disposable incomes, and thus the government’s efforts to alleviate their financial burdens can quickly translate into a surge in consumption, she added.
Ensuring the stability and resilience of market players, especially in the private sector, is essential for unlocking the full potential of the economy and sustaining a robust recovery, as these enterprises serve as the fundamental driver of employment and income growth for residents and play a key part in investment, Chen said. Strengthening the legal framework, improving law enforcement, and offering direct assistance to companies are all part of the government’s comprehensive efforts to create a more conducive environment for the development of market entities, according to the NDRC. In particular, the legislative process to enact the law on promoting the private economy will be hastened. The disproportionate dependence on fines and penalties as a means of generating government revenue has created a sense of uncertainty among market players, Chen said, as reported by the China Daily.
