By Yang Xite
From December 23 to 24, China’s national fiscal work conference was held in Beijing, where the work report was delivered by the country’s Minister of Finance Lan Fo’an. This conference serves not only as a comprehensive implementation and specific deployment of the ideals of the Central Economic Work Conference held earlier but also as a systematic arrangement for key financial tasks in 2025. As an important executive department of national economic policy, the Ministry of Finance (MOF)’s work plan not only concerns macroeconomic stability and social development but also guides local governments and relevant departments.
Researchers at ANBOUND point out that the main theme of the conference is obvious: to fully implement the ideals of the Central Economic Work Conference and translate the established policy requirements into specific operational plans for the financial sector. Therefore, this is a typical meeting for execution rather than for innovation. The core task of this meeting is not to propose new policy breakthroughs, but to strengthen policy implementation, ensuring the efficiency of fund use and the achievement of policy objectives.
Similar to the functions of the National Development and Reform Commission (NDRC), the MOF, as an important component of China’s economic governance system, is fundamentally positioned as an executor and guarantor. Hence, the fiscal policy must not only align with macroeconomic regulation but also provide support for economic stability and high-quality development through precise policy measures and efficient coordination of resources.
From the content of the meeting, the fiscal work for 2025 will focus on six key areas. These areas are not entirely new proposals, but rather the concretization of the tasks outlined in the Central Economic Work Conference, further emphasizing the characteristic of the policy being execution-oriented and implementation-focused.
First is the expansion of the overall demand through greater financial spending intensity. In 2025, the core task of economic policy will be to expand national demand through increased spending. Against the backdrop of a complex and ever-changing international environment and growing external uncertainties, the importance of domestic demand in China has become more prominent. Hence, the policy will simultaneously focus on both investment and consumption, aiming to activate the economy’s endogenous growth drivers by expanding effective investment and boosting consumption. On the investment side, the fiscal focus for next year will be on reasonably arranging the scale of bond issuance, using government investment to drive social investment and promote high-quality development. To cite some examples, infrastructure construction, new energy development, and industrial upgrading will become key investment directions. Particularly, major projects such as the enhancement of national comprehensive freight hubs and supply chain improvements will receive focus, with fiscal funds playing a guiding and supporting role.
The consumption side is also an important lever for expanding domestic demand. The meeting explicitly proposed that the basic pensions for retirees, basic pensions for urban and rural residents, and fiscal subsidies for medical insurance should be appropriately increased, fundamentally enhancing residents’ purchasing power. At the same time, the “old-for-new” policy for consumer goods will continue to be deepened, stimulating residents’ purchasing power, particularly in emerging consumer sectors such as green home appliances and smart devices, where fiscal subsidies may be further increased. Therefore, more policies aimed at directly stimulating consumption are likely to be introduced next year.
In addition, fiscal spending may be further increased next year, with the deficit ratio expected to rise to 4.0% or higher. This will release more fiscal funds, providing greater policy space and operational flexibility for expanding domestic demand. Compared to special bonds and special government bonds, the use of deficit funds is more direct, with higher fund efficiency and faster results, helping to inject stronger momentum into China’s domestic demand in the short term.
Second, the objectives of the policy are to ensure and improve people’s livelihoods, reflecting a people-centered development approach. Livelihood issues have consistently been a key focus of fiscal policy. The meeting emphasized the importance of prioritizing employment, supporting the development of education, improving the social security system, and addressing the urgent concerns of the public. In line with these goals, China’s fiscal policy in 2025 will continue to increase investment in sectors such as education, healthcare, and pensions.
It is worth noting that the meeting proposed improving the population development support policy system. Subsidies and support measures for families with two or more children are expected to be further expanded. This may include increasing the scope of pre-tax deductions for childcare expenses or directly providing childcare subsidies, thereby reducing the cost of raising children for families. At the same time, fiscal policies are expected to alleviate the living pressures of key groups such as unemployed youth and rural elderly people and boost consumer confidence and social expectations through direct subsidies and expanded employment support programs. In terms of employment, it is expected that policy support for enterprises to stabilize and expand positions will continue to be strengthened, such as by reducing costs for businesses, while also encouraging companies to prioritize the employment of key groups like university graduates.
Third, the key role of fiscal policy in preventing and resolving major risks will be emphasized. The meeting pointed out that in 2025, such efforts will be concentrated in key areas, especially the potential risks related to local government debt and the real estate market. Regarding local government debt, it proposed implementing comprehensive debt reduction plans while enforcing financial discipline and resolutely curbing the accumulation of new hidden debts. It is foreseeable that 2025 will be a critical year for tackling and resolving the local debt issue. At the same time, the central government will further increase transfer payments to help local governments stabilize the “three guarantees” (i.e., safe housing, healthcare, and education), so as to ensure that basic living standards, wage payments, and institutional functions are not affected.
In addition, the real estate market remains a key focus of fiscal policy. The meeting clearly emphasized the need to halt the market’s decline and maintain stabilization. In 2025, fiscal policy is expected to provide more targeted support to the real estate sector, such as establishing a real estate stability fund to ensure the delivery of housing, stockpile existing properties, and acquire land from property companies. These measures aim to ease cash flow pressures on real estate companies, prevent further deterioration of market expectations, stabilize the industry’s fundamentals, and avoid risks from spreading to the financial sector and other areas.
Fourth, focus will also be given to promoting the construction of a modern industrial system and optimizing the supply structure. Achieving high-quality development requires fiscal policy to focus more on supply-side reforms. The meeting pointed out the need to strengthen technological innovation capabilities, fully support the breakthrough of key core technologies, and push for the transformation and upgrading of traditional industries. In 2025, fiscal policy is expected to invest more resources in supporting new productive forces. This means that fiscal measures will further increase support for original and disruptive technological innovations, such as through special funds for basic research and the development of cutting-edge technologies. In addition, support for manufacturing, particularly small and medium-sized enterprises that are specialized and innovative, will also be further strengthened. This may include policies such as research and development subsidies and tax incentives to help businesses reduce innovation costs.
Fifth, support will be given to urban-rural integrated development. Urban-rural integration is a key strategy for addressing developmental imbalances. For instance, national food security and achievements in poverty alleviation are fundamentally about ensuring that people have sufficient food sources and enjoy a better quality of life. At the same time, rural development and new urbanization aim to modernize rural areas and make cities more inclusive, fostering complementary and coordinated growth between urban and rural regions. The goal of regional coordinated development is to allow each area to leverage its unique advantages, rather than focusing solely on one. This approach promotes not only economic integration but also social equity.
Sixth, efforts will be made to strengthen high-level opening-up and ecological development. Opening up remains a key aspect of China’s economic strategy and a driving force for future growth. Participation in global economic governance is important for gaining influence in rule-setting and engaging in multilateral and bilateral economic discussions. The Belt and Road Initiative and tariff policy adjustments are measures aimed at further integrating the country with the global economy. In terms of green development, fiscal policy will focus on sustainability by supporting a green and low-carbon transformation to balance economic growth and environmental protection.
It is notable that this year’s national fiscal work meeting unlike last year’s, removed the expression of “tightening the belts”. This suggests a shift in fiscal policy direction. This indicates that China’s fiscal spending will be more active, targeted, and robust. It also signals the need for greater fiscal support to boost the economy, with an emphasis on increasing the domestic demand of the country. With a higher deficit ratio, increased special bonds, and financial support for local governments, more funds will be directed toward areas such as livelihoods, consumption, and employment.
Final analysis conclusion:
The key feature of China’s national fiscal work meeting this year is more on the execution side rather than innovation. The fiscal policy for 2025 will focus on precise action more proactively, laying a solid foundation for the conclusion of the 14th Five-Year Plan and the start of the 15th Five-Year Plan. The country’s local governments will need to fully understand the meeting’s directives to grasp the central government’s policy direction for the effective implementation of these policies.
- Yang Xite is a Research Fellow at ANBOUND, an independent think tank.
