China’s finance ministry vows measures to boost consumption and investment next year

The Ministry of Finance has vowed concerted efforts to expand domestic demand next year as well as more and quicker fiscal expenditure after Beijing elevated consumption to a top priority and pivoted to more active policies to revitalise the economy.

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The ministry will “appropriately increase” pensions and medical insurance subsidies to underpin consumption growth and give more support to consumer goods trade-in schemes, according to a statement released after Tuesday’s conclusion of a ministry conference on next year’s work agenda. It said the ministry will also promote effective investment, issue new bonds and boost spending.

“In 2025, we will implement a more proactive policy combination for a higher fiscal deficit ratio, increase expenditure intensity and accelerate the speed of spending to drive investment and consumption,” Finance Minister Lan Foan said at the meeting.

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Beijing has identified key tasks for next year to put the growth of the world’s second-largest economy back on track. On top of reviving consumption as a top target, the top leadership also stressed the need for more active fiscal policies, including raising the deficit ratio, at this month’s tone-setting central economic work conference.

While Beijing has also shifted its monetary policy stance for 2025 to “moderately loose”, some economists have called for the onus of economic policy boosts next year to be placed on the fiscal side.

Economist Tao Dong told a forum last week that the focus of China’s fiscal policy next year will shift from stimulating investment to stimulating spending and that more consumption-boosting fiscal policies are in the pipeline.