Editor’s Note:
As the world undergoes changes unseen in a century and the global economy faces growing uncertainty, China’s economic development has garnered increasing global attention. While the Chinese economy is frequently covered by international media, such reports are often biased or inaccurate. To provide an objective and professional perspective and to debunk misconceptions about the world’s second-largest economy, the Global Times is launching a special column entitled China Barometer. In this series, we invite renowned Chinese and foreign economists to share their insights into the latest development trends in China and their global implications. This is the first article in the series.
A view of shopping mall in Shanghai on January 6, 2025. Photo: VCG
China’s economy made steady progress in 2024 with the support of robust measures, showcasing its resilience while highlighting its pivotal role in the international economic landscape. As it stands at a new juncture with emerging opportunities, what’s in store for the world’s second-largest economy in 2025?
One of the most closely watched aspects of the Chinese economy is the strengthening role of domestic demand as a stabilizing force for China’s economic growth in 2025. Meanwhile, transforming and upgrading the economic structure has become increasingly urgent to sustain resilience, with in-depth internal reform and innovation to provide critical support.
This year, the biggest highlight of China’s economy will be that consumption and investment will become important engines of economic growth.
Following a detailed analysis of the macroeconomic environment, the annual Central Economic Work Conference (CEWC) held in Beijing in December urged efforts to vigorously boost consumption, improve investment efficiency, and expand domestic demand on all fronts, which has been identified as a top priority of the country’s economic work in 2025.
From “focus on expanding domestic demand” to “expand domestic demand on all fronts,” this shift in tone at the 2024 CEWC reflects the Chinese leadership’s deeper understanding of the economic situation. Expanding domestic demand is both an urgent need to stabilize growth and a strategic move to transform the economic development model.
The country’s consumption activity has already been rising in various sectors including tourism, services and catering, making the focus on boosting consumption and demand essential to accelerating recovery in more sectors and revitalizing the broader economy.
Expanding consumption
Amid profound adjustments in the international economic landscape, rising trade protectionism and increasing global economic uncertainties, there is a clearer consensus that the domestic market serves as the cornerstone for stable economic growth.
China’s large population, a continuously expanding middle-income group and increasingly improved infrastructure offer a robust foundation and substantial potential for the expansion of domestic demand. Harnessing these potential advantages to generate tangible economic growth, comprehensive strategic planning and effective policy measures are essential.
By intensifying trade-in programs, creating new jobs, raising residents’ incomes, introducing innovative consumption scenarios and enhancing the consumption environment, we can effectively improve consumption capacity and willingness. Cutting tax and fees will reduce burdens on enterprises, improve their profitability, and encourage greater investment.
Tian Xuan Photo: Courtesy of Tian Xuan
Government investment will play a leading role in stimulating social investment, while expanding institutional opening-up in key areas will improve the service environment for foreign investors, stabilizing and effectively attracting foreign investment.
Moreover, China’s property market is expected to stabilize in 2025. By reducing home purchase restrictions, implementing urban renewal and housing renovation projects, as well as enforcing housing credit and tax policies to reduce purchasing costs, residents’ essential and improving housing needs can be better addressed. China is now boosting the transformation of the property market by establishing a new development model for the sector and improving the housing supply and demand system. A series of measures are further reversing the downturn of the real estate market and stabilize it.
Impactful policies
The coordination of policies is essential to ensure the comprehensive expansion of domestic demand.
2025 is the final year of China’s 14th Five-Year Plan (2021-25) period, the CEWC has noted that more proactive and impactful macro policies should be implemented to sustain the upward trend of the economy, so as to fulfill the goals and tasks in the 14th Five-Year Plan with high quality and lay a solid foundation for a good start to the 15th Five-Year Plan (2026-30).
This includes more significant reductions in the reserve requirement ratio and interest rates, more open market operations, and improvements to structural monetary policy tools to improve their targeted effectiveness.
On the fiscal side, measures will include raising the fiscal deficit ratio, increasing the issuance of ultra-long special treasury bonds and local government special-purpose bonds, and enhancing investment in critical areas, livelihoods, education, healthcare, and environmental protection, to enhance the efficiency and impact of fiscal spending. Expanding domestic demand will revitalize the market, fostering a recovery in consumption and investment growth.
China’s fiscal and monetary policies for 2025 represent appropriate adjustments to address the current economic landscape, featuring a proactive policy stance, heightened emphasis on innovation, and a more systemic approach. With comprehensive measures, the aim is to optimize policy outcomes and resolve key challenges confronting the economy.
This reflects the Chinese leadership’s clear understanding of the current economic environment and their steadfast confidence in future development. It will not only help expand overall demand and foster a supportive financial environment for business operations, but also promote sustained economic recovery, energize market vitality, enhance the economic structure, and establish a robust foundation for high-quality development.
In 2025, the Chinese economy still faces challenges such as heightened uncertainties in the global economic and political landscape, mounting debt pressures in the real estate sector during its adjustment phase, and new challenges along with economic structural reform.
The new year will demonstrate the resilience and adaptability of the Chinese economy while generating new opportunities for the global community. The Chinese economy is poised to address domestic and external challenges, ensuring sustained and stable growth.