Industrial robots carry out welding operations in an intelligent workshop of an automobile manufacturer located in Jiangdu Hi-tech Industrial Development Zone, Yangzhou, East China’s Jiangsu Province, on October 18, 2024. China's GDP grew 4.8 percent year on year in the first nine months of 2024, data from the National Bureau of Statistics (NBS) showed on the day. Photo: VCG

China unveiled its overall macroeconomic policy orientations and arrangements for economic development in 2025 during the annual two sessions ongoing in Beijing. The GDP growth target, deficit-to-GDP ratio, consumer price index, and other key indicators announced in the Government Work Report serve as important benchmarks for assessments of the Chinese economy, sparking widespread discussion domestically and internationally.

In the face of rising global uncertainties and challenges, and supported by a more proactive fiscal policy, an appropriately accommodative monetary policy, and collaborative efforts driven by scientific and technological innovation, China's economy is expected to demonstrate strong resilience in tackling challenges and to steadily advance toward high-quality development.

Yu Miaojie Photo: Courtesy of Yu Miaojie

Specifically, in terms of fiscal policy, China has set the deficit-to-GDP ratio for this year at about 4 percent, an increase of one percentage point over last year. The government deficit is set at 5.66 trillion yuan ($780 billion). This year, a total of 1.3 trillion yuan of ultra-long special treasury bonds, 500 billion yuan of special treasury bonds and 4.4 trillion yuan of local government special purpose bonds will be issued. 

In addition to the local fiscal revenue of about 22 trillion to 23 trillion yuan, the total available fiscal expenditure will exceed 33 trillion yuan this year. Apart from defusing debt risks, the fiscal expenditures are anticipated to be primarily used to stimulate investment and construction, another key focus of China’s economic work this year.

An appropriately accommodative monetary policy should be demonstrated in both the monetary aggregate and structure. From the perspective of the monetary aggregate, in my opinion, the optimal M2 should be more than twice the broad GDP. In 2024, China’s GDP has exceeded 130 trillion yuan, so M2 in this year should be more than 260 trillion yuan. 

In terms of the monetary structure, while defusing debt risks and ensuring financial stability are important, it is equally crucial to ensure that money can genuinely flow into production, circulation and other sectors. This is also the reason for the current arrangements of combining appropriately accommodative monetary policy with more proactive fiscal policy.

To fulfill the economic goals and tasks set for this year amid global uncertainties, the Government Work Report emphasized the focus on pursuing integrated advancements in technological and industrial innovation, and in intensifying efforts to develop new quality productive forces. In addition, the Government Work Report noted the significance of expanding higher standard opening-up, regardless of changes in the external environment.

To accelerate the development of new quality productive forces, greater emphasis should be placed on nurturing innovative enterprises and making effective plans for the strategic industries of the future. In many emerging industries, China is currently on par with the US, allowing Chinese companies and industries to fully realize their potential and overtake overseas competitors.

In addition to the eight strategic emerging industries proposed by the Third Plenary Session of the 20th Central Committee of the Communist Party of China – next-generation information technology, artificial intelligence, aviation and aerospace, new energy, new materials, high-end equipment, biomedicine, and quantum technology, and steer emerging industries toward sound and orderly development – areas that should also include the low-altitude economy.

To expand higher standard opening-up, more efforts can be put into promoting the formation of a new pattern of comprehensive opening-up on a larger scale, in a broader field, and at a deeper level.

Regardless of whether it is in the realm of goods trade dominated by manufacturing, or in areas such as services trade, digital trade or green trade, China's trade volume still has significant growth potential. In the face of the pressure from the US’ protectionist tariffs, China can actively explore and diversify its trade partners, such as the emerging industrialized nations, BRICS countries and members of the Shanghai Cooperation Organization.

The services trade in China exceeded the $1-trillion mark for the first time in 2024, which still allows for significant growth potential. Digital trade encompasses both the digital industrialization and the digitalization of industries, with the two complementing and promoting each other in further growth. China's exports of the "new three" – electric vehicles, lithium batteries and photovoltaic products – are leading globally, with green trade exports reaching 14 percent of the global total, surpassing the 11 percent share of China’s total trade in relation to global trade. It is expected that this growth momentum will be maintained.

The article was compiled based on an interview with Yu Miaojie, the president of Liaoning University and a deputy to the 14th National People's Congress. bizopinion@globaltimes.com.cn