China is set to begin its annual economic work meeting on Wednesday to map out policies for next year, with top leaders hinting at more forceful stimulus amid the threat of a potential trade war with the US.
The two-day Central Economic Work Conference is expected to run through Thursday, focusing on setting the economic agenda for 2025, Bloomberg reported earlier. It typically gathers some central government and provincial leaders, along with the heads of state-owned financial institutions and companies.
The meeting will give investors their next glimpse into how policymakers plan to approach the coming year. The Politburo — the Communist Party’s decision-making body — has revived language not seen since the global financial crisis more than a decade ago, pledging a “moderately loose” monetary policy and “more proactive” fiscal tools to support the economy.
China's Fiscal Policy Not Supportive of Growth | Actual spending only rose 1% so far this year vs forecast 3% rise
The government may increase policy support in the next two years given the prospects for higher US tariffs, said Tao Wang, chief China economist at UBS Group. This includes setting more supportive policy tones for 2025 at the upcoming work conference, she added.
See also: ‘Decisive action’ from China only expected in 1Q2025, but equities rally on stimulus hopes
The meeting will likely discuss setting a growth goal for 2025, although specific figures will only be announced in March during the annual meeting of the legislature. Economists at UBS and Citigroup Inc. see Beijing setting a target of around 5% again to anchor market expectations, though achieving this may be difficult.
Investors will also pay close attention to which areas of the economy will be prioritized, particularly whether there will be an additional focus or new strategies aimed at supporting domestic demand and the property market.
Much of the stimulus so far has been directed at producers and infrastructure, particularly in sectors like electric vehicles, solar and batteries. With President-elect Donald Trump threatening to put tariffs of up to 60% on Chinese goods, calls have grown for Beijing to shift toward more consumer-focused policies.
See also: China eases monetary policy stance, vows more fiscal support
The Politburo has made boosting consumption a top priority, signaling that the work conference will focus on demand for 2025. President Xi Jinping’s emphasis on manufacturing as the engine of economic growth has sparked complaints from the US and European Union, who accuse China of flooding their markets with cheap goods.
Policymakers may also set a higher-than-usual budget deficit target of up to 4% of gross domestic product, economists forecast. That would pave the way for more central government borrowing to support the struggling economy.
While the tone on fiscal policy is likely to be supportive, analysts expect only a modest expansionary package at the start of 2025. Additional support may follow if external risks materialize, said Citigroup economist Xiangrong Yu, adding that the policy approach next year could closely resemble that of 2024.
“The authorities are likely to react to growth trajectory and tariff threats, adding more support if growth falls too much,” Yu wrote in a report. “The CEWC could signal a tone to move ahead of the curve, yet the high-level guidance may do little to address working-level issues.”
Xi has used several meetings over the past week to project confidence in the world’s second-biggest economy. On Friday, he told a workshop with non-members of the Communist Party that the country’s economic operation is stable and making progress.
This week, he said the country has full confidence in achieving 2024’s growth target following a meeting with the heads of major international financial institutions, including the World Bank, in Beijing.
Still, he voiced concerns about decoupling, saying he hopes Washington will work with Beijing to maintain dialogue, expand cooperation and manage differences in a way that fosters stable and healthy US-China relations.
“Tariff wars, trade wars and technology wars go against the historical trend and economic laws,” Xi said. “There will be no winners.”
