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China's Ministry of Finance unveiled plans to implement a more proactive fiscal policy in 2025, including increasing the fiscal deficit-to-GDP ratio and issuing larger-scale government bonds, as outlined in an official statement after the ministry's two-day national financial work conference held from Monday to Tuesday.
China will implement a more proactive fiscal policy next year, with sustained and intensified efforts to deliver a well-coordinated package of measures aimed at ensuring economic stability and driving growth, said Finance Minister Lan Fo’an at the meeting.
"First, we will increase the fiscal deficit ratio, increase spending, and accelerate expenditure progress," said Lan.
China set its deficit-to-GDP ratio at 3 percent for 2024 and the government deficit at 4.06 trillion yuan, an increase of 180 billion yuan from the 2023 budget figure. In 2024, 3.9 trillion yuan of special-purpose bonds for local governments would be issued, an increase of 100 billion yuan over 2023. In addition, 1 trillion yuan of ultra-long special treasury bonds was issued in 2024, according to this year's government work report released in March.
In the Central Economic Work Conference, which was held earlier this month, Chinese leaders decided priorities for the economic work in 2025, including setting a higher deficit-to-GDP ratio and ensuring that its fiscal policy is continuously forceful and more impactful. Also, it said China will increase the issuance of ultra-long special treasury bonds and continue to support projects for implementing major national strategies and building security capacity in key areas.
The ministry’s conference also highlighted boosting domestic demand as a key focus for 2025, aligned with the strategic objectives outlined at the Central Economic Work Conference.
Key fiscal priorities for next year also include prioritizing people-centered policies, encouraging consumption and driving economic growth, as well as increasing transfers to local governments.
China will also strive to prevent and resolve risks in key areas, and promote stable fiscal operations and sustainable development. Fiscal payments transfers to local governments will also be further increased to help strengthen local fiscal resources, the statement said.
This meeting also called for the effective implementation of existing and new fiscal policies, promoting the development of science and technology leadership, and taking proactive measures to mitigate major risks in critical areas to achieve new progress and effectiveness in fiscal work.
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