China aims to maintain a stable yuan exchange rate, with the People’s Bank of China effectively managing this. The country has set an economic growth target of ‘around 5%’ for 2025, which has garnered considerable attention.
Additionally, the Consumer Price Index (CPI) target for 2025 is set at approximately 2%. In 2025, 1.3 trillion yuan in ultra-long special T bonds will be issued, increasing from 1 trillion in 2024.
Proactive Fiscal Policy
A more proactive fiscal policy is planned, with an emphasis on stability within property and stock markets. The consumer trade-in stimulus remains at 300 billion yuan, reduced from previous expectations of 800 billion.
This approach underscores China’s commitment to maintaining economic stability while carefully navigating monetary policy. The People’s Bank of China has continued to manage the yuan closely, aiming to prevent excessive fluctuations that could disrupt financial markets. A growth target of around 5% suggests a balance between ambition and realism, recognising external pressures while maintaining confidence in domestic expansion.
The 2% Consumer Price Index target indicates that authorities expect manageable inflation levels. This aligns with the broader goal of ensuring stability in consumer purchasing power while avoiding excessive monetary tightening. Inflation rates that stray too far from this benchmark could prompt adjustments in policy tools, with authorities likely to intervene if conditions warrant.
The decision to raise ultra-long special T bond issuance to 1.3 trillion yuan in 2025, up from 1 trillion the previous year, signals a strategic move towards bolstering government spending. This increase suggests a continued effort to support long-term infrastructure and economic activity without abruptly shifting fiscal direction. Given recent concerns in real estate and equities, authorities have made clear their preference for a steady approach rather than sudden policy shifts.
With fiscal policy set to be more proactive, there is a clear emphasis on keeping financial markets stable while maintaining consumer and investor confidence. Policymakers remain mindful of previous volatility in property and stock sectors, favouring measures that reinforce broader economic health rather than risk fueling uncertainty.
Consumer Trade In Stimulus
The consumer trade-in stimulus, now standing at 300 billion yuan rather than the previously discussed 800 billion, reflects a more restrained approach towards direct economic intervention. While it remains a sizeable support measure, this reduction suggests a reassessment of how much stimulus is needed, likely taking into account broader fiscal policy considerations and current consumption patterns.
Those active in speculative markets should closely monitor China’s approach as authorities continue to balance economic resilience with controlled policy adjustments. The measures outlined indicate a deliberate effort to sustain growth without resorting to excessive intervention, reinforcing the need for careful assessment of near-term shifts in fiscal and monetary policy.
