China’s Economic Strategy: Xi Jinping Calls for More Proactive Policies in 2025
President Xi Jinping of China has announced plans for “more proactive” macroeconomic policies in the upcoming year, according to state media reports. Addressing a top political advisory body, Xi emphasized the need for strategic measures to address the challenges facing the country’s economy.
Struggles and Aggressive Measures
Throughout the year, China has faced difficulties stemming from a property market crisis, weak consumption, and high government debt. In response, Beijing has implemented a series of aggressive measures to stimulate growth. These measures include interest rate cuts, the removal of home buying restrictions, and easing the debt burden on local governments.
Economists’ Warnings
Despite these efforts, economists have cautioned that more direct fiscal stimulus focused on boosting domestic consumption is necessary for a complete economic recovery. Xi stressed the importance of deepening reforms, expanding opening up at a high level, coordinating development and security, and implementing proactive and effective macroeconomic policies.
Challenges Ahead
Acknowledging the obstacles ahead, Xi highlighted the uncertainties in the external environment and the need to transition from old growth drivers to new ones. However, he expressed confidence that with hard work, these challenges can be overcome.
Growth Projections
Beijing aims for a growth rate of around five percent this year. While officials are optimistic about achieving this target, many economists believe it may be narrowly missed. The International Monetary Fund forecasts a growth rate of 4.8 percent for this year and 4.5 percent for the next.
Positive Signs
Recent data on factory activity in China has shown positive signs, indicating that the stimulus measures are beginning to have an impact. The Purchasing Managers’ Index for December, a key indicator of industrial output, stood at 50.1, signaling a third consecutive month of expansion. Additionally, the non-manufacturing PMI rose to 52.2 in December, up from 50.0 in November.
Expert Analysis
Gabriel Ng of Capital Economics noted that the official PMIs suggest a growth momentum in December, driven by the services and construction sectors. He attributed this growth to increased policy support towards the end of the year, providing a near-term boost to the economy. Ng highlighted the rise in export orders, particularly to the US, as a contributing factor to the positive economic outlook.
As China navigates its economic challenges and strives for growth, the proactive stance taken by President Xi Jinping underscores the country’s determination to overcome obstacles and achieve stability in the coming year.
