Han Wenxiu: Timely Rate Cuts and Reserve Requirement Reductions Critical, Alongside Effective Use of Open Market Tools
As 2024 draws to a close, China's economic resilience continues to attract global attention. Amid evolving domestic and international challenges, Han Wenxiu, Deputy Director of the Central Financial and Economic Affairs Commission Office, has provided crucial insights into the economic policy landscape. His recommendations not only offer clarity on immediate priorities but also chart a strategic course for 2025 and beyond.
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Resilient Growth Amid Challenges
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China's economy has maintained steady momentum in 2024, with GDP growth hovering around 5% and total output nearing RMB 130 trillion. Despite global headwinds, China's contribution to global growth remains significant, accounting for nearly one-third of the global total. Han Wenxiu emphasized key drivers of this resilience:
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Balanced External Accounts
With foreign exchange reserves consistently exceeding USD 3.2 trillion, China has managed to buffer external shocks effectively. Export performance has been bolstered by the continued growth of high-tech and high-value-added goods, underscoring the ongoing transformation of China's trade structure. -
Green Economy Leadership
Han highlighted China's leadership in green industries, with annual new energy vehicle production and sales maintaining world-leading positions. Investments in renewable energy and carbon reduction technologies further demonstrate a commitment to sustainable growth.
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Policy Recommendations for Economic Stability
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Han emphasized the importance of targeted measures to ensure economic stability:
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Monetary Policy Adjustments
Han called for timely reductions in interest rates and reserve requirements. These actions aim to lower financing costs, invigorate private investment, and alleviate pressure on businesses. -
Efficient Use of Market Tools
Open market operations, including precise liquidity injections, should be leveraged to maintain market confidence and stabilize financial conditions. -
Structural Support for Enterprises
Policies must prioritize "Little Giants"—innovative small and medium enterprises—to enhance productivity and technological progress across industries.
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Navigating Uncertainties with Confidence
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Han Wenxiu underscored the need to address key uncertainties:
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Global Economic Slowdown
Acknowledging weaker demand from major economies, he stressed the need for export diversification and expanded trade partnerships. -
Domestic Consumption Revival
Strengthening household income and consumer confidence remains a priority to unlock pent-up demand and drive sustainable growth.
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