The Central Economic Work Conference (CEWC) 2024 was held at a critical time. World economy is grappling with skyrocketing debt, growth rate, protectionism, anti-globalisation and decoupling. Climate change’s impact on economy and global leadership’s unwillingness to tackle it further complicate the economic and development landscape.
The situation asked for cooperation, but Western world is moving in another direction. They are targeting China and unleashing a new wave of sanctions.
However, global expert community recognises that despite all odds, China is still the centre of global economic growth. Statistics show China accounts for 30pc of global economic growth. In addition, China is entering 2025, which is the last year of 14th Development Plan. It is expected China will steer all horses to achieve targets/goals of 14th Plan and create ground for 15th Development Plan.
Against this backdrop, the CEWC became very important and was closely watched by the domestic and international community.
The CEWC started by analysing performance of 2024, including how economy behaved, what was good, what needed correction and how it contributed to 14th Plan. The leadership expressed satisfaction with the economic performance. It was noted Chinese economy exhibited positive trends and made good progress in implementation of high-quality development. The GDP grew at 4.8pc during first three quarters and is expected to be 5pc by the end of year.
Nevertheless, most important part of the meeting was deliberations on economic plan for 2025. However, the leadership is cognizant the economy will have to face challenges on external and internal fronts in 2025.
On the external front, China will have to deal with harsh attitude of West, sanctions, protectionism, decoupling, deglobalisation, etc., especially technology sector will have to prepare for more difficult times. On the internal front, country will have to sort out demand issues, ease pressure of supply shocks, manage real estate, rationalise savings (Chinese household savings are the highest among countries; in 2022, household savings increased by $2.6 trillion), ease out local governments from the debt and accelerate high-quality development. Thus, after in-depth discussions and scenario building, CEWC developed a list of policy options and actions to boost the economy in 2025.
Efforts will be made to boost consumption and demand at domestic level. It is required to lower impact of external and internal pressure, sustain economic growth, and ensure sustainability of economy in the long run. China is already working on it; in March, China 2024 launched a national programme to promote consumer trade-in. The government issued long-term bonds of 300 billion yuan to support the programme. It has been observed over 300 million consumers benefited from the programme, and 400 billion yuan of business was made through it. Moreover, September stimulus package further boosted consumption.
The Chinese government will also issue long-term bonds to expedite consumption. The leadership has also decided to improve further and strengthen social security system so that people can feel free to consume more.
The leadership emphasised role of technology in sustainable growth, development and achieving goal of high-quality development. Thus, China will be striving to modernise its production system, supply chain and service sectors.
China will work to facilitate and strengthen industries of the future to consolidate its position in emerging technologies. It will introduce a new programme for artificial intelligence promotion and development. Innovation has been identified as a key area for achieving the objective and leading world in Fourth Industrial Revolution. The innovation will also help China protect its economy from negative implications of sanctions imposed by the US.
The leadership indicated China would pursue a proactive fiscal policy and rationally lose monetary policy. This is a big step because, after financial crisis of 2008, China has been pursuing a prudent monetary policy. Experts believe China can afford to lose its monetary policy, as it has a huge cushion to increase spending and borrowing, and central government’s debt is only 24pc of GDP. The fiscal and monetary policies will assist China in pursuing excellence in innovation and technological development. They will also promote and strengthen consumption, high-quality development and economic modernisation.
The leadership has identified government should formulate new pro-childbirth policies. This is a huge announcement, meaning it is an official departure from previous policy of controlled childbirth. China will develop mechanisms to defuse risk in real estate and local government debt and protect them from such risks in future. The banks will lend 4 trillion yuan in 2024 to help real estate companies.
Data shows 2.3 trillion has already been lent to companies. People’s Bank of China will cut the interest rate by 0.5 percentage points, on average, on the outstanding mortgages. The downpayment limit will be lowered from 25pc to 15pc for purchase of a second home. The leadership decided to continue to ease pressure on the real estate sector in 2025.
China has decided to promote green development and lower its carbon footprint, fostering high-quality development. The government will focus on rural revitalisation. It will work to modernise agriculture, enhance its competitiveness and modernise food supply chains. This will help ensure food security and strengthen rural economy.
China will foster a comprehensive economic opening. Building on the pilot programme to open up in the fields of telecom, healthcare and education, it will further expand the sectors for opening up. The investment efficiency will be ensured, enhanced and made more investment-friendly.
To make the opening vibrant and fruitful, coordination among fiscal, monetary, employment, industrial, regional, trade, environmental and regulatory policies, the country’s reform and opening-up measures will be improved. Moreover, China will make efforts to stabilise its global trade. Simultaneously, special efforts will be made to create trade opportunities for other countries and erect mechanisms for sharing dividend of technological development.
Lastly, the leadership and China will remain firmly committed to welfare of people. The meeting urged implementation of employment support plans for key sectors and industries as soon as possible. Efforts will be intensified to improve welfare of rural and urban communities, develop community-supported at-home elderly care and expand universally beneficial elderly care services.
The above discussion leads to three conclusions. First, China achieved its economic goals in 2024. Building on this success, Beijing will strive to foster economic growth and better prepare itself to achieve goals of 14th Development Plan in 2025. Second, policies and actions outlined for 2025 have long-term implications. Thus, it is assumed outcome of CEWC provides a blueprint for 15th Development Plan. Third, the focus of all policies would be welfare of people and building a community with a shared future.
