Official announcements from the People's Bank of China

China Plans 4% Budget Deficit in 2025 to Stimulate Consumption and Attract Foreign Investment, Enhance Cross-Border Financing and Stabilize Yuan

Jan 13, 2025, 01:23 AM

China has announced plans to implement a proactive fiscal policy in 2025, aiming to bolster economic growth through increased government spending. The country's finance minister has stated that China has ample fiscal space to support these initiatives, with the budget deficit expected to rise to 4% of GDP in 2025, up from a long-standing target below 3%. This policy shift includes a focus on stimulating domestic consumption, expanding imports, and attracting foreign investment. Specific measures include implementing a consumer goods trade-in program, promoting digital consumption, and expanding cross-border e-commerce, green trade, and trade digitalization. To attract foreign investment, China will expand voluntary and unilateral opening up, enhance the role of national economic development zones, and align with high-standard international economic and trade rules. The People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have also moved to enhance cross-border financing by adjusting a key macro-prudential management parameter from 1.5 to 1.75. Additionally, efforts to stabilize the weakening yuan have been intensified, with measures such as verbal warnings and adjustments to capital controls. These actions are part of a broader strategy to support the economy amid challenges like a property market downturn and weak investor confidence, and to promote international cooperation in industrial chains, supply chains, and deepen Silk Road e-commerce cooperation. The Ministry of Commerce has also emphasized the importance of drafting the 15th Five-Year Plan (2026-2030) to ensure the safety of production and stable market supply.