China's 2025 Fiscal Agenda: Proactive Policies to Bolster Growth and Stability
China's Ministry of Finance has unveiled a comprehensive plan for 2025 to reinforce economic resilience and ensure sustainable development. During the National Fiscal Work Conference held on December 23–24, Finance Minister Lan Fo'an emphasized the importance of a proactive fiscal policy, underpinned by targeted measures to address key challenges in the post-pandemic recovery.
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Key Measures to Strengthen Economic Momentum
ONE
To maintain stability and drive growth, the government plans to raise the fiscal deficit-to-GDP ratio, accelerate expenditure deployment, and improve resource allocation. Notable initiatives include:
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Elevated Deficit Spending: Increasing the fiscal deficit will create space for investments and support consumption.
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Government Bond Issuance: Expanded bond issuance will fund infrastructure projects and drive structural adjustments.
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Targeted Spending: Emphasis will be placed on improving livelihoods, fostering innovation, and promoting industrial transformation to achieve high-quality growth.
The Ministry highlighted precise fiscal measures to bolster social safety nets, enhance public services, and stimulate domestic consumption. Planned actions include raising pensions and healthcare subsidies, improving public service systems, and promoting nationwide consumer goods upgrades.
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Driving Innovation and Industry Modernization
TWO
The 2025 fiscal policy prioritizes modernizing China’s industrial system, with a focus on technological innovation and strategic sectors. Key measures include:
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Support for Core Technologies: Funding breakthroughs in critical technologies to reduce dependence on foreign supply chains.
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SME Assistance Programs: Strengthened support for “specialized, refined, distinctive, and innovative” small and medium-sized enterprises.
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Streamlining Business Costs: Efforts to eliminate arbitrary fees, fines, and administrative burdens on enterprises.
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Regional and Social Integration
THREE
Balanced urban and rural development remains a priority. Fiscal strategies include:
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Urban-Rural Integration: Advancing rural development while fostering new urbanization projects.
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Grain Security: Ensuring food security through agricultural modernization and poverty alleviation efforts.
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Support for Local Governments: Increased transfer payments to bolster local financial resources and safeguard essential services.
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Risk Prevention and Fiscal Discipline
FOUR
To address rising local government debt, the Ministry pledged systematic reforms and enhanced oversight. Lan Fo'an stressed the importance of mitigating hidden debt risks and strengthening fiscal governance through:
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Zero-Based Budgeting: Promoting rational allocation of public funds.
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Enhanced Supervision: Stricter audits to improve accountability and prevent resource misuse.
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Debt Management: Transparency measures to curb municipal debt risks and improve financial stability.
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Broader Economic and Policy Implications
FIVE
Coordinated fiscal and monetary policies aim to address structural challenges, enhance productivity, and stimulate demand. These measures lay a strong foundation for achieving the "15th Five-Year Plan" objectives.
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