ShareBEIJING: China is “determined” to continue opening up its economy to the world in 2025, a top economic planning official said Friday, as Beijing steels itself for potential trade turmoil when US President-elect Donald Trump takes office.
The world’s second-largest economy has struggled to revive growth following the COVID-19 pandemic and remains beset by a debt crisis in the crucial housing sector, chronically low consumption and high youth unemployment. Prospects may darken further after Trump’s inauguration on January 20 - the mercurial US leader hiked tariffs on Chinese imports during a wide-ranging trade war in his first term in office, and has promised more of the same. But on Friday officials from China’s top planning body, the National Development and Reform Commission (NDRC), said that “no matter how the external environment changes, full of uncertainty, China’s determination and actions to open up to the outside world will remain unchanged”. “In the new year we will certainly take many new measures... to steadily expand systemic openness and further build a business environment that is marketized, under rule of law, and internationalized,” NDRC deputy director Zhao Chenxin said at a press conference on Friday.
He said China plans to encourage greater foreign investment in “advanced manufacturing, modern services, high-tech, energy saving and environmental protection”. Authorities have been clear they want to reorient the economy around such areas of high-tech innovation, for example in the green energy sector — leaving behind the double-digit “growth at all costs” of the past.
The country’s installed capacity of wind and solar power reached a combined 1.31 billion kilowatts, accounting for 40.5 percent of total power generation capacity last year — up from 36 percent in 2023, Zhao said Friday. But some figures hinted at more long-term challenges for the economy, chief among them an ageing population. The country’s total childcare providers reached the 100,000 mark in 2024, while the number of elder care facilities hit 410,000, Zhao said. China’s central bank said it will cut banks’ reserve requirement ratio and interest rates at “proper time” during a quarterly meeting of its monetary policy committee held last week, according to a statement published on Friday.
The committee of the People’s Bank of China (PBOC), suggested strengthening monetary policy adjustments and adopting a more forward-looking, targeted and effective approach, according to the fourth quarter meeting held on Dec 27. The remarks echoed a Financial Times report on Friday, which cited the central bank as saying that the PBOC is likely to cut interest rates from the current level of 1.5 percent “at an appropriate time” in 2025. Such remarks align with policymakers’ commitment made last year towards creating a more market-driven interest rate curve. Analysts anticipate the central bank will make further changes this year to ensure credit demand is more responsive to monetary policy moves.
The PBOC said that it would prioritize “the role of interest rate adjustments” and move away from “quantitative objectives” for loan growth, the FT reported, as it embarks on a program of interest rate reform that government advisors have called “an arduous task”. The economy’s main rate is its seven-day reverse repo rate, which the PBOC last cut to 1.5 percent from 1.7 percent in late September. China’s 10-year and 30-year treasury yields both hit record lows on Friday on expectations of fresh monetary easing. “(The PBOC will) enrich and improve monetary policy toolkit, conduct buying and selling of treasury bonds and pay attention to changes in long-term yields,” the central bank said in the statement.
It also pledged to smooth the transmission mechanism of monetary policy and improve the efficiency of money utilization. Such comments underlined a broader plan to spur growth in the world’s second-largest economy, where a severe property crisis has eroded consumer wealth and household spending and most government stimulus was going to producers and infrastructure.
China’s decision-making Politburo last month shifted the nation’s monetary policy stance to “appropriately loose” from “prudent,” in a first such move since its “prudent” stance was adopted in 2010. The PBOC’s pledges also come as China braces for more trade tensions with the United States as Donald Trump returns to the White House. The bank vowed it will stabilize foreign exchange market expectations and keep yuan reasonably stable. Government advisers are recommending Beijing keeps its growth target unchanged this year at around 5 percent, but have also called for more forceful fiscal stimulus to bolster depressed domestic demand. — Agencies
