BEIJING (Reuters) – China pledged on Thursday to increase the budget deficit, issue more public debt and ease monetary policy in 2025 to maintain a stable economic growth rate, as it prepares for new trade tensions with the United States.
The remarks, reported by state media, were made during the annual meeting of the country’s top leaders, known as the Central Economic Work Conference (CEWC), which was held on Wednesday and Thursday.
This meeting comes as the world’s second-largest economy faces difficulties in the real estate market, low consumer confidence and high local government debt.
It highlighted its over-reliance on exports amid an increasingly tense global trade environment, as US President-elect Donald Trump threatens higher tariffs upon his return to the White House. next month.
“The negative impact of changes in the external environment has worsened,” state media said following the closed-door CEWC meeting.
On Monday, Chinese Communist Party leaders issued the most pessimistic statement in more than a decade, the Xinhua news agency reported. China’s Politburo advocated for looser monetary policy, a shift in tone suggesting Beijing could do more to support its economy.
The Politburo had also called for a more proactive fiscal policy and pledged to strengthen extraordinary countercyclical adjustments.
“It is necessary to implement a more active fiscal policy, increase the budget deficit ratio, increase the issuance of special very long-term Treasury bonds and increase the issuance and use of special obligations of local governments,” the CEWC summary states.
The leaders also pledged to reduce bank reserve requirements and lower interest rates “in a timely manner.”
This change in tone shows that China is ready to take on more debt, prioritizing, at least in the short term, growth over financial risks, analysts say.
Beijing sets targets for economic growth, budget deficit, debt issuance and other variables for the coming year as part of the annual CEWC, but they will not be officially released until the annual parliamentary meeting in March.
(Beijing Office, written by Marius Zaharia; Diana Mandiá, edited by Kate Entringer)
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