Bloomberg Economists: China’s 2025 Potential Stimulus Policies Aim to Ease Economic Slowdown

Insights - The Central Economic Work Conference held on December 11-12 in Beijing outlined China’s 2025 economic strategy, emphasizing moderately accommodative monetary policy.

Key Takeaways from the Conference

1. Growth Target: A rare mention of explicit economic growth goals signals a strong focus on stability. 

2. Higher Fiscal Deficit: Experts predict the deficit ratio will rise to 3.5%-4%.

3. Monetary Easing: Analysts expect a 50bps RRR cut, a 50bps policy rate cut, and a 25bps LPR cut in 2025.  

4. Capital Market Reforms: Efforts to facilitate long-term capital inflows.

5. Domestic Demand Focus: Strengthening policies to expand domestic demand.  

Other priorities include leveraging technology for growth, advancing key reforms, expanding high-level opening-up, stabilizing real estate, addressing financial sector risks, and promoting regional strategies.  

Here are the analysts' insights.

Macquarie Group’s Larry Wu, Head of China Economics, noted the conference’s supportive tone for economic growth but highlighted the lack of detailed policy measures. Wu expects the government to increase spending rather than directly distributing funds to consumers. By raising public leverage and boosting government spending, the strategy aims to stimulate overall demand.

Bloomberg Economists state that the shift toward stronger economic support in 2025 aligns with their outlook that growth will likely slow, with stimulus measures acting as a buffer.