Spurring consumption among priorities

Boosting domestic demand and spurring consumption will be among the top priorities for policymakers 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.

Experts said the country is fine-tuning its macroeconomic 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 People's Daily on Tuesday that the country will implement a "moderately accommodative" monetary policy, launch policy rate cuts and reserve requirement ratio 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 spot, Han said in the article.

"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 showed that China's final consumption expenditure contributed to 82.5 percent of total economic growth in 2023, up 43.1 percentage points from the previous year.

Looking at 2025, Wang Yun, deputy director of 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, drive greater strides in equipment upgrades and trade-in deals for consumer goods and optimize the subsidy issuance process."

Wang added that more efforts should also be made to cultivate new consumption formats such as 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."

Data from the NBS showed the latest official snapshot of the stabilizing economy amid the government's recent stimulus measures to boost domestic demand, with China's official purchasing managers index for the manufacturing sector remaining in expansionary territory for the third consecutive month in December 2024.

The manufacturing PMI came in at 50.1 in December versus 50.3 in November, remaining above the 50 mark that separates expansion from contraction, NBS data showed on Tuesday.

China's nonmanufacturing PMI, which includes subindexes for activity in the services and construction sectors, rose from 50 in November to 52.2 in December.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said the December manufacturing PMI declined slightly mainly due to seasonal factors.

"With the existing policies and a series of incremental stimulus measures taking effect gradually, the manufacturing PMI remained in the expansionary territory, and the construction and services PMIs also improved, indicating the economic performance in the fourth quarter is better than in the third quarter."

Looking ahead, he said factory activity will likely expand mildly this month. "Government measures to boost consumption and stabilize investment will accelerate in early 2025, providing strong support for steady growth in the manufacturing sector."

Betty Wang, lead economist with British think tank Oxford Economics, said, "There's a high possibility that the authorities will extend the consumer trade-in programs in 2025 and expand the scope to cover more home appliances."

ouyangshijia@chinadaily.com.cn