Chinese authorities are bracing the struggling economy for the shocks that will come from higher tariffs after US President-elect Donald Trump takes office. To help revive an economy reeling from a property crisis and disruptions during the pandemic, the ruling Communist Party is introducing a series of measures. They are aimed at getting Chinese consumers and businesses to spend more money and countering the decline in the Chinese currency and stock prices.
Here are some of the main measures on China's 2025 priority list:
Spending subsidies
China plans to expand its car recycling programs to encourage more purchases of new, energy-efficient models. The recycling drive, which began last year, has seen 6.5 million gasoline-powered vehicles replaced with electric and hybrid vehicles. New car sales have seen double-digit growth in recent months.
More money on the way
So far, China has refrained from launching a major stimulus wave, opting for a more targeted and gradual approach. However, Zhao Chengxin, head of the National Development and Reform Commission, China’s main planning agency, said the government plans to issue “significantly larger” long-term bonds to finance such spending. But specific figures will not be announced before the annual meeting of the national legislature, which is due to be held in early March.
Protecting “people's money“
China's central bank said it was determined to keep the value of the yuan unchanged and stabilize financial markets.
The Chinese currency, also called “people's money”, has weakened against the US dollar and other currencies, putting pressure on financial markets. Its stock market has fallen again after a brief recovery in late September, when the Shanghai Composite Index jumped to almost 3,700, falling back to just above 3,200.
A weaker yuan could make Chinese exports more competitive, but it also risks angering China’s trading partners.
An information curtain over the economy
China’s ruling party allows little room for public dissent, and even the scope for talking about the economy is narrow. Authorities have shut down social media accounts of economists who challenge government policies as they try to rally support for President Xi Jinping’s leadership. A recent Xinhua report called for ensuring “correct public opinions” that are consistent with creating “a basic public opinion of unity and progress.”
But talk of the economy can obscure the hard reality, said a recent report by the Rhodium Group, a think tank, which estimated China’s actual economic growth last year at 2.4 percent to 2.8 percent, well below the official estimate of around 5 percent.
One big factor behind the lower-than-expected growth is the problems with the pockets of the people that are curbing demand, such as falling house prices and lower wages. The report also said: “No key policy measures have been announced that will significantly change the employment or wage outlook.”