Following a high-level meeting of the Communist Party leadership on Monday, state media confirmed that China will seek to insulate its economy from external volatility by turning inward, pledging to "keep expanding domestic demand" through a suite of "more proactive" policies.
The announcement comes from the Politburo, the Party’s top decision-making body, and was relayed by the state news agency Xinhua. The directive signals a decisive shift in tone as the government looks to secure a strong footing for the commencement of the country’s next Five-Year Plan.
Analysts interpret the Politburo's call for a "more proactive fiscal policy" and "appropriately loose monetary policy" as a green light for significant government spending and increased liquidity. This language typically points to a widening of the budget deficit, increased sovereign debt issuance, and potential cuts to interest rates and the reserve requirement ratio (RRR) in the coming year.
Economists believe these measures are designed to defend a GDP growth target that is likely to remain anchored around 5% —a figure Beijing views as essential for maintaining social stability and development momentum.
"We should put people's livelihood first and strive to do more practical things for the people," the meeting concluded, emphasising a need to "stabilise jobs, firms, markets and expectations."
Structural headwinds persist
While the world's second-largest economy is largely on track to meet its 2025 growth targets, the recovery remains fragile. Beijing is battling a confluence of challenges, most notably a multi-year liquidity crisis in the property sector—which once accounted for a quarter of the nation’s output—and persistent deflationary pressures that have eroded consumer confidence.
Furthermore, "excess factory capacity" in key manufacturing sectors has led to trade friction abroad, while traditional infrastructure-led investment is yielding diminishing returns at home.
Trade pivot
The policy announcement also reflects a strategic pivot in China’s international trade relations. Despite Beijing and Washington recently reaching a trade truce to de-escalate tariff tensions, Chinese manufacturers are aggressively diversifying away from American reliance.
Customs data released on Monday underscored this shift. While Chinese shipments to the United States plummeted by 29% year-on-year in November, exports to the European Union surged by 14.8%.
Simultaneously, trade with fast-growing Southeast Asian economies rose by 8.2%, as Chinese firms leverage global footprints to establish new production hubs and bypass trade barriers.
Xinhua noted that the leadership intends to "better coordinate" domestic economic priorities with these international trade battles in the coming year.
Central Economic Work Conference to meet
Investors and global markets are now awaiting the Central Economic Work Conference (CEWC), expected to convene in the coming days. This annual closed-door gathering of top officials will translate the Politburo’s broad political directives into specific economic tactics.
While the Politburo sets the tone, the CEWC determines the practical application of policy. However, the official numerical targets for GDP, inflation, and fiscal deficits will not be formally disclosed until the National People’s Congress holds its annual parliamentary session in March.
Focus on the Consumer
Beijing appears to be acknowledging that long-promised structural reforms can no longer be delayed. Although the Xinhua report did not explicitly use the term "household consumption," the directive to "adhere to the principle of domestic demand taking the lead" suggests a realisation that sustainable growth must shift from state investment to consumer spending.
U.S. President Donald Trump urged Iran on Wednesday (28 January) to come to the table and make a deal on nuclear weapons or the next U.S. attack would...
Life will be particularly tough for Ukrainians over the next three weeks due to plunging temperatures and a compromised energy infrastructure that has...
Storm Kristin has killed at least three people and left more than 800,000 residents without electricity across central and northern Portugal, as viole...
U.S. stock markets finished mixed on Wednesday (28 January) as investors reacted calmly after the Federal Reserve left interest rates unchanged, a dec...
Liverpool confirmed direct qualification to the UEFA Champions League round of 16 with a 6-0 win over Qarabağ at Anfield in their final league-phase ...
Life will be particularly tough for Ukrainians over the next three weeks due to plunging temperatures and a compromised energy infrastructure that has been pummeled by intense Russian attacks, depriving millions of light and heat, a senior lawmaker said on Wednesday.
Storm Kristin has killed at least three people and left more than 800,000 residents without electricity across central and northern Portugal, as violent winds, heavy rain and snowfall battered the country before moving into Spain.
U.S. stock markets finished mixed on Wednesday (28 January) as investors reacted calmly after the Federal Reserve left interest rates unchanged, a decision that had been widely expected and largely priced in.
Liverpool confirmed direct qualification to the UEFA Champions League round of 16 with a 6-0 win over Qarabağ at Anfield in their final league-phase match. Despite the setback, Qarabağ secured a play-off spot, with results elsewhere going in the Azerbaijani champions’ favour on the final matchday.
France’s National Assembly has approved a bill banning access to social media for children under 15, a move backed by President Emmanuel Macron and the government as part of efforts to protect teenagers’ mental and physical health.
The S&P 500 edged to a record closing high on Tuesday, marking its fifth consecutive day of gains, as strong advances in technology stocks offset a sharp selloff in healthcare shares and a mixed batch of corporate earnings.
Israel has recovered the remains of the last remaining hostage held in Gaza, the military said on Monday, fulfilling a key condition of the initial phase of U.S. President Donald Trump's plan to end the war in the Palestinian territory.
Sanctions are a long-used tool designed as an alternative to military force and with the objective of changing governments’ behaviour, but they also end up hurting civilian citizens.
A routine military training exercise turned into a major recovery mission this week after a catastrophic mudslide swept through a hillside in West Java, Indonesia.
U.S. President Donald Trump urged Iran on Wednesday (28 January) to come to the table and make a deal on nuclear weapons or the next U.S. attack would be far worse. Tehran responded with a threat to strike back against the United States.
Life will be particularly tough for Ukrainians over the next three weeks due to plunging temperatures and a compromised energy infrastructure that has been pummeled by intense Russian attacks, depriving millions of light and heat, a senior lawmaker said on Wednesday.
Storm Kristin has killed at least three people and left more than 800,000 residents without electricity across central and northern Portugal, as violent winds, heavy rain and snowfall battered the country before moving into Spain.
New York City Mayor Zohran Mamdani has called for tax increases on the city’s wealthiest residents and most profitable corporations, warning that the city is facing a fiscal crisis on a scale greater than the Great Recession.
The United States is handing over a tanker to Venezuela that it seized earlier this month, according to two U.S. officials, marking the first known case of Donald Trump’s administration returning such a vessel, Reuters reported.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment