Boosting domestic demand and spurring consumption will be among the top priorities for policy makers in addressing economic challenges in 2025, with strong stimulus measures designed to restore consumer sentiment and improve the supply-side offerings, said officials and economists. The country is fine tuning its macro-economic strategy, marking a significant shift toward a consumption-driven economy as it prepares for expansionary fiscal and monetary policies in the new year. Han Wenxiu, Executive Deputy Director of the Office of the Central Committee for Financial and Economic Affairs, said the country will adopt a more proactive fiscal policy this year. Measures in the pipeline include increasing the deficit ratio, more ultra-long-term special treasury bonds and local government special bonds and increased fiscal spending to support economic growth.
Han said in an article published in the People’s Daily that the country will implement a “moderately accommodative” monetary policy, launch policy rate cuts and reserve requirement ratio (RRR) cuts whenever it is deemed appropriate and maintain sufficient liquidity. Among the nine major tasks listed for the year, boosting consumption and improving investment efficiency will be at the top. “Compared with other major global economies, China’s domestic demand remains insufficient, and its consumption rate is relatively low. These gaps also represent untapped potential,” Han said. “Expanding domestic demand in all aspects will be a central focus of policy efforts in the near future.” Data from the National Bureau of Statistics (NBS) showed that China’s final consumption expenditure contributed 82.5% of total economic growth in 2023, up 43.1 percentage points from the previous year. Looking at 2025, Wang Yun, Deputy Director of the Xi Jinping Thought on Economy Study Center, said it is advisable to implement targeted actions to stimulate consumption, with a focus on closely combining boosting consumption with improving people’s livelihoods.
“We should work to ensure stable growth in residents’ income, improve the normal wage growth mechanism for workers and increase support for specific groups,” she said. “Meanwhile, we should increase direct fiscal spending on final consumption, promote equipment upgrades and trade-in deals for consumer goods, and optimize the subsidy process.” Wang added that more efforts should also be made to cultivate digital and green consumption and innovate diversified consumption scenarios. “We should actively develop emerging sectors such as the debut economy, ice and snow economy and silver economy, enhancing the supply-side adaptability to medium- and high-end demand.”
China’s official purchasing managers index (PMI) for the manufacturing sector remained in expansionary territory for the third consecutive month in December 2024, reaching 50.1 in December versus 50.3 in November, remaining above the 50 mark that separates expansion from contraction. China’s non-manufacturing PMI, rose from 50 in November to 52.2 in December, the China Daily reports.
