Experts at national think tanks have indicated that China’s economy is on track for a “V-shaped” recovery, driven by swift policy measures and upcoming spending plans aimed at consolidating momentum.
Wu Sa, a senior researcher at the Chinese Academy of Macroeconomic Research, affiliated with the National Development and Reform Commission, expressed optimism that the combination of incremental policies would help the country meet its annual economic targets. Nearly half of the planned policy measures have already been implemented, with more on the way, including expanding investments eligible for local government bond proceeds and increasing financial aid for students.
In a bid to boost investment, the Ministry of Finance announced plans to advance part of the 2025 local government debt quota. This move aims to stimulate both demand and supply in the economy, marking a shift from previous years’ focus on supply-side reforms, according to Dong Shaopeng, an advisory committee member of the Securities Association of China.
The property market, which has faced challenges in recent years, is also showing signs of recovery. Sales of newly-built commercial housing showed a smaller year-on-year decline, narrowing to 20.9% in the first 10 months of the year, an improvement from the previous period.
The government’s 12 trillion yuan ($1.66 trillion) debt resolution package, introduced earlier this month, is also being implemented at a rapid pace, with several provinces, including Zhejiang and Jiangsu, already announcing plans to issue special bonds to address local debt.
Yang Zhiyong, president of the Chinese Academy of Fiscal Sciences, highlighted that the debt package will ease local government repayment pressures, allowing for greater focus on economic development and public welfare. Experts believe there is still room for China to expand its debt raising and increase the deficit-to-GDP ratio in 2025 to further support fiscal spending.
Dong also noted that China has the potential to inject 5 trillion to 8 trillion yuan in fiscal support next year, depending on market conditions. These ongoing policy efforts signal a positive outlook for the Chinese economy as it continues its recovery trajectory.