China’s Bold Roadmap For Economic Activity In 2024
China’s leaders pledged to propel domestic demand and fortify the economic recovery in 2024 on Friday. The Politburo, a top decision-making body of the ruling Communist Party, expressed its commitment during a meeting chaired by President Xi Jinping. Here are the key details shaping China’s economic activity trajectory.
Challenges and Measures for Recovery
The Chinese government decided to respond to a post-pandemic economic recovery hindered by a property crisis and local government debt risks, along with slow global growth and geopolitical tensions. Thus, it has recently introduced a slew of measures. These include a proactive fiscal policy, credit rating downgrades warning by Moody’s, and efforts to control the property crisis.
Analysts anticipate that the Chinese government may need to introduce additional stimulus measures to support the economy. The latter continues to face headwinds concerning economics. President Xi emphasized the importance of implementing a proactive fiscal policy. He also spoke about a prudent monetary policy that is “flexible, moderate, precise, and effective.” The goal is to enhance economic sustainability, prevent and resolve risks, and consolidate the positive trend of economic recovery.
President Xi Jinping’s Vision
President Xi Jinping, during a meeting with non-Communist Party representatives, also emphasized that the country’s economic recovery is at a critical stage. Most analysts believe that China is on track to achieve its growth target of around 5% this year. However, they acknowledge that the journey is hard and slow.
The Politburo stressed the need to expand domestic demand, forming a virtuous cycle of mutually promoting consumption and investment. Additionally, the call to deepen reforms in key areas to inject strong impetus into high-quality development resonates with the broader economic environment.
Setting the Stage for 2024
As the year unfolds, China’s policymakers will likely set a steady growth target for 2024, with fiscal policy taking a leading role. Bruce Pang, chief economist at Jones Lang Lasalle, asserts that fiscal policy will undoubtedly play a pivotal role in shaping the economic landscape in 2024.
Analysts at UBS anticipate that China may set a fiscal deficit target of 3.5%-3.8% of gross domestic product (GDP). Moreover, they expect a special local government bond quota of around 4 trillion yuan ($560 billion) for 2024. This marks an increase compared to this year’s figures. Besides, it also indicates a proactive approach to bolster economic growth.
Recent Policy Measures and Central Bank Initiatives
In recent months, the Chinese government has launched various policy measures. That includes modest interest rate cuts and increased cash injections by the central bank aimed at supporting economic growth. The issuance of sovereign bonds and adjustments to the 2023 budget deficit target further underlines the commitment to navigating the challenges of a recovering global market economy.
As China’s leaders outline their economic roadmap for 2024, the focus remains on steering the nation through the complexities of a recovering global economic environment. The upcoming Central Economic Work Conference, a sequel to the Politburo’s meeting, will likely provide more concrete insights into the measures and strategies that will shape China’s economic trajectory in the coming year.
