China Eyes Growth Through Stability and Consumption
At a Glance
The Central Economic Work Conference (CEWC) translates the Politburo’s political goals into specific growth targets and detailed administrative policies, with further refinements expected at the “Two Sessions” in March.
Despite geopolitical challenges, the CEWC outlined a strategy to stabilize economic growth by addressing core domestic concerns and structural issues.
China aims to achieve a GDP growth rate of 5% in 2024, with confidence in maintaining similar performance in 2025.
The government has committed to a “proactive” fiscal policy and a “moderately loose” monetary policy to ensure liquidity, increase business revenues and household incomes, stabilize real estate and stock markets, and enhance social welfare.
Domestic demand and consumption have been prioritized, and coordinated policies and targeted campaigns are planned for 2025. Thus, revitalizing consumption is at the center of China’s growth strategy.
The “Invest in China” brand underscores the importance of foreign investment and trade. Foreign businesses that align with priorities like innovation, job creation, and consumption stimulation are well-positioned to capitalize on China’s growth potential.
Economic and Political Context
China’s Central Economic Work Conference (CEWC) remains a cornerstone in shaping the nation’s economic strategy, translating high-level political objectives into practical policies. Concluded on December 12, 2024, this year’s session highlighted the government’s focus on stabilizing growth and addressing domestic and global challenges.
Despite geopolitical tensions and evolving trade dynamics, China projects confidence in achieving a 5% GDP growth rate for 2024, with a similar target anticipated for 2025. This optimism is grounded in a commitment to proactive fiscal and monetary policies, strengthened social welfare initiatives, and a renewed emphasis on domestic consumption as a primary growth driver. These strategies reflect Beijing’s aim to ensure sustainable and high-quality economic development amid a complex global landscape.
Key Priorities from the CEWC
The CEWC reinforced several critical priorities shaping China’s economic trajectory in 2025. Central to these discussions was the acknowledgement of significant domestic and international challenges, including subdued consumption, geopolitical tensions, and structural economic imbalances. The CEWC provided a roadmap for stabilizing growth through targeted measures emphasizing fiscal and monetary policy adjustments, consumption revitalization, and innovation-led economic transformation.
One of the most prominent themes was adopting proactive fiscal and monetary policies to bolster liquidity and stabilize the economy. Fiscal policies will focus on increasing government spending to address critical areas such as infrastructure, social benefits, and the green economy. Complementing these measures, a “moderately loose” monetary policy aims to enhance liquidity, ensuring businesses and households have access to credit. These actions are designed to stabilize key markets, including real estate and finance, and prevent systemic risks that could derail economic growth.
The CEWC also emphasized revitalizing consumption, identifying it as the cornerstone of sustainable economic development. The government aims to address the persistent lack of consumption capacity, confidence, and willingness through a coordinated policy package. These measures include expanding consumer subsidies, encouraging trade-in programs for durable goods, and easing the financial burdens on middle-income households. By prioritizing the social welfare of low- and middle-income groups, such as improving social benefit coverage and reforming individual income tax policies, the government seeks to amplify disposable income and foster greater spending. Stabilizing the real estate market and addressing financial market volatility were also highlighted as critical for boosting consumption confidence and willingness.
The conference also underscored the importance of innovation and green growth as pillars for high-quality economic development. Policies centered on an “AI Plus” initiative aim to integrate artificial intelligence into traditional industries, unlocking new drivers of productivity and competitiveness. Green transitions are another focal point, with plans to modernize traditional industries and invest in emerging renewable energy and sustainable manufacturing sectors. These efforts reflect China’s broader goal of reducing reliance on real estate-driven growth while cultivating future industries capable of sustaining long-term economic momentum.
Another recurring theme was strengthening domestic demand as a key economic driver. While investment and trade remain critical, the CEWC signaled a shift toward consumption-driven growth as a more sustainable model. This includes fostering new consumption trends, such as the “ice and snow economy,” which symbolizes the growth of emerging industries characterized by rapid innovation and market expansion. Similarly, the “silver economy” targets the needs of the aging population, while the “debut economy” has three defining characteristics—first-time launches, chain development, and trend set-in. These targeted efforts aim to diversify growth sources, stimulate domestic demand, and cultivate high-potential industries that align with long-term economic goals.
China’s continued emphasis on economic opening and integration was also evident, reflecting its intent to solidify its position as a vital player in the global economy. The “Invest in China” brand is central to this effort, which aims to enhance the country’s appeal to foreign investors while bolstering China’s global economic influence. A dual strategy of balancing inbound and outbound investments underscores this approach, enabling foreign enterprises and Chinese companies to contribute to the nation’s economic momentum.
On the inbound investment front, China is implementing measures further to ease market access for foreign businesses across high-growth sectors. Industries such as healthcare, digital services, and data centers have been identified as priorities, with trials underway for wholly foreign-owned operations in value-added telecom services and healthcare facilities. By opening its markets more comprehensively and introducing business-friendly policies, China seeks to attract global companies with expertise in innovation, sustainability, and advanced technologies. These efforts aim to cultivate a dynamic and competitive domestic market while providing foreign businesses new opportunities to thrive within the country’s economic ecosystem.
Simultaneously, the “Chinese Company Going Global” strategy encourages Chinese enterprises to expand their international presence, contributing to global supply chains and enhancing China’s economic footprint abroad. This initiative prioritizes bilateral and regional economic collaborations, enabling Chinese firms to engage in joint ventures, strategic partnerships, and investments that align with global market needs. By doing so, Chinese companies aim to enhance their competitiveness while fostering mutual economic growth with partner nations.
Navigating Economic Risks and Challenges
The CEWC also underscored the importance of navigating a landscape fraught with risks. Globally, China faces rising trade protectionism and the resurgence of deglobalization, exacerbated by strained US-China relations. Domestically, the economy grapples with local government debt burdens, weak consumption demand, and policy implementation gaps. While recent economic indicators suggest resilience, public and business sentiment lags, reflecting underlying structural challenges.
Beijing’s approach is anchored in a coordinated strategy that balances development and risk management. This includes mitigating systemic risks in key areas such as real estate and finance while ensuring that policy execution is practical and results-driven.
Policy Highlights and Implementation Strategies
China’s policy direction for 2025 revolves around three interconnected strategies:
- Restructuring debt to alleviate financial pressures,
- Promoting domestic demand to drive growth, and
- Advancing economic reforms to stabilize confidence.
Implementation will hinge on targeted initiatives, including consumer goods trade-in programs, reforms to ease middle-class debt burdens, and income tax adjustments to bolster purchasing power.
Innovation and green transitions will play pivotal roles in driving economic transformation. China aims to achieve high-quality growth by fostering industry upgrades and cultivating emerging sectors. The government also plans to stabilize consumption by addressing systemic vulnerabilities in real estate and financial markets, ensuring a foundation for sustained confidence.
What Businesses Can Do
China’s evolving economic policies and structural reforms offer a range of opportunities for both domestic and foreign businesses. However, navigating this landscape requires strategic confidence, adaptability, and a focus on compliance and innovation.
Maintain Strategic Confidence and Embrace Compliance
Businesses should maintain confidence in China’s economic growth potential, supported by the government’s commitment to stabilizing the economy and mitigating systemic risks. Incremental policy packages designed to improve economic structures will ensure a favorable operating environment with reduced regulatory uncertainties. At the same time, businesses must prepare to meet stricter compliance requirements, particularly in areas such as job creation and income security. By aligning with these standards, businesses can protect their operations and gain government recognition as responsible stakeholders in China’s market.
Explore Growth in Emerging Consumption Demand
Emerging consumption trends present substantial opportunities for businesses to expand and diversify. Innovation and green transitions, coupled with initiatives that improve people’s livelihoods, including job creation and talent development, will be prioritized by the government. Businesses that tap into these areas, such as the service industry, telecommunications, healthcare, and education, can unlock new growth avenues. Identifying comparative advantages in sectors tied to consumption growth will allow businesses to align their strategies with China’s priorities, securing support and driving market expansion.
Leverage Economic Opening and Optimize Risk Management
Foreign businesses are set to benefit from China’s continued market opening and structural reforms to build a unified national market. Enhanced market access offers significant opportunities, particularly in high-growth sectors like healthcare, digital trade, and telecommunications. However, with rising global protectionism and complex geopolitical dynamics, businesses must proactively manage risks. This includes developing contingency plans, safeguarding operations from potential political or trade conflicts, and mitigating rising compliance costs. By protecting their political license to operate and ensuring alignment with local regulations, companies can navigate uncertainties while maximizing opportunities.
Capitalize on Unified Market and Global Engagement
China is pushing to optimize its business environment. A unified national market provides foreign enterprises with a stable platform to expand operations. Additionally, leveraging bilateral and regional economic collaborations allows businesses to integrate into global value chains and foster partnerships that align with China’s outbound investment strategies. Proactively participating in these initiatives will benefit businesses from China’s domestic reforms and expanding global footprint.
Materials presented by Edelman Global Advisory Japan. For additional information, reach out to Cynthia.Xing@Edelman.com or Richard.Andrew@EdelmanEGA.com
