China has conditions, room to strengthen counter-cyclical adjustments: official

BEIJING -- China has the conditions and room to strengthen counter-cyclical adjustments, providing strong policy support for achieving annual goals and tasks, said a senior official.

The remarks, made by an official from the Office of the Central Committee for Financial and Economic Affairs, came after last week's tone-setting Central Economic Work Conference.

Next year, China will implement a more proactive fiscal policy for the first time, and adopt a moderately loose monetary policy after having a prudent monetary policy for 14 consecutive years, according to the official.

The major shift in the tone of macro regulation reflects concerns that the adverse effects of changes in the external environment may deepen, while the domestic economy continues to face challenges, the official said.

It is crucial to confront these challenges head-on and take proactive actions to ensure good economic performance in the coming year, the official added.

Expanding domestic demand is a strategic move, with boosting consumption being the top priority, the official said.

Next year, measures such as increasing fiscal support for consumer spending and enhancing social security will be implemented to ensure stable growth in residents' incomes.

It is widely acknowledged that this year's policies promoting large-scale equipment upgrades and trade-ins for consumer goods have been highly effective, the official said, adding that efforts will be intensified next year, with more funds allocated, a broader range of consumer goods included in the support scope, and improvements made to the subsidy distribution process.

Next year, funds raised through ultra-long special treasury bonds to support the promotion of large-scale equipment upgrades and trade-ins for consumer goods will increase substantially compared to 2024.

Efforts will also focus on including more products and sectors with broad market demand and strong upgrade potential into the scope of policy support. The implementation mechanisms of these policies will be further optimized, with enhanced monitoring and evaluation to improve the effectiveness of fund utilization.

Various market entities should be encouraged to offer diversified services, focusing on meeting residents' consumption needs in areas such as healthcare, elderly care, childcare, and domestic services.

As a key driver of domestic demand, China's investment potential remains substantial, the official said.

For infrastructure investment, stronger support will be provided to implement major national strategies and build security capacity in key areas.

Efforts will focus on developing new quality productive forces, promoting integrated urban-rural development, enhancing regional coordination, and advancing high-quality population growth. Measures will include increasing allocations of ultra-long special treasury bonds, optimizing fund allocation, improving investment mechanisms, and enhancing investment efficiency.

China will advance urban renewal projects and the reconstruction of old, dilapidated housing while intensifying efforts to address gaps in education, healthcare and elderly care services. Investment in technological innovation, industrial upgrades and green transformation will be also increased.

To expand its high-standard opening up, China will actively align with advanced international economic and trade standards, accelerate the development of a globally oriented network of high-standard free trade zones, and promote negotiations on a range of multilateral and bilateral trade agreements, the official said.

Enterprises will be supported in exploring diversified markets and the sustained healthy development of cross-border e-commerce will be fostered.

The regular communication mechanism with foreign-invested enterprises will be further improved to address their legitimate concerns effectively, and the visa-free policy will be further optimized to attract and facilitate cross-border travel for business professionals, according to the official.

On promoting the development of the private economy, China will provide business entities with fair access to competitive areas in infrastructure, and support capable private enterprises in leading national initiatives to make breakthroughs in major technologies.

Efforts will be made to formulate the guidelines for the development of a unified national market, and optimize the market access environment for new business forms and new sectors, according to the official.

Local governments will be urged to make good use of policies such as new local government special-purpose bonds, and do their best to accelerate clearing overdue payments owed to enterprises.

To support major economically developed provinces in better shouldering greater responsibility, China will expand the usage scope of special bonds, delegate these provinces with greater power in areas such as project declaration and fund allocation, and step up support in factor allocation.

These provinces will also be granted more opportunities to conduct preliminary trials on reform and opening up, the official added.

Regarding dual carbon goals, China will steadily promote the transformation towards green and low-carbon development, and resolutely tighten control over fossil fuel consumption.

On the premise of ensuring energy security, measures will be taken to speed up the planning and development of a new-energy system, the official said.

The country will accelerate the development of a more effective, dynamic and internationally influential carbon market, focus on the building of a number of green and low-carbon industrial clusters, and continuously increase the proportion of green and low-carbon industries.

On the property market, China will allow cities to adjust and reduce restrictions on housing purchases based on local conditions, and implement credit and tax policy measures that have been introduced to effectively lower the house purchasing costs.

Also, local governments will be given greater autonomy when purchasing existing commercial homes, the official said.

Efforts will be made to improve the basic systems, including housing, land, finance, fiscal and taxation, and implement as soon as possible the institutional arrangements and policy measures that have direct impacts on stabilizing the property market.

China's government debt ratio is around 70 percent, a relatively low level in the world. The official said that the country's debt risks are generally under control, and the debt risks of local governments are being effectively alleviated and managed following the introduction of a raft of effective policies.

For the next year, more proactive and impactful macro policies should be implemented to sustain the upward trend of the economy and create a favorable macro environment to guard against and defuse the debt risks of local governments, according to the official.

Efforts will be made to coordinate reforms on fiscal and taxation systems and place more fiscal resources at the disposal of local governments, so as to provide institutional support for defusing local government debt risks.

The official also pledged resolute measures to curb debt financing that violates laws or regulations, cautioning that new illegal debts must be avoided while defusing existing debt risks.

With all these measures to be implemented, government debts will gradually become commensurate with economic development and financial resources, thus effectively reducing local government debt risks, the official said.