China Aims for Recovery : Key Moves To Boost Its Economy

All eyes are on Beijing, where a major conference is taking place that could redefine China’s economic directions until 2025. As the world’s second-largest economy faces a prolonged real estate crisis, weakened domestic consumption, and renewed trade tensions with the United States, this annual meeting takes on great importance. At a time when the global economic balance remains precarious, the decisions that will emerge from it will have repercussions far beyond China’s borders.

The great economic challenges at the heart of the conference

The Central Conference on Economic Work, which opened this Wednesday, December 11, 2024, is a must-attend event to define China’s economic priorities for the horizon of 2025. Under the supervision of Xi Jinping and the cadres of the Chinese Communist Party, this meeting focuses on several structural challenges that threaten the country’s growth. Among the most urgent issues is the real estate crisis, where major companies like Evergrande continue to falter. This situation undermines the entire sector and fuels concerns about the financial stability of the world’s second-largest economy.

In this context, officials are seeking to halt the economic slowdown through the adoption of measures likely to reboot the engine. Chinese exports, the traditional driver of growth, have significantly slowed down in recent months. They fell from a rise of 12.7 % in October to just 6.7 % in November. In light of this observation, a new economic direction has been mentioned. The Political Bureau announced an “appropriate easing of monetary policy,” a measure that could translate into a decrease in interest rates as early as 2025, the first time in more than a decade. This choice reflects the urgency to act to support an economy under severe strain.

However, some observers are calling for caution regarding expectations related to this conference. “Few concrete measures should be announced, which could disappoint the markets,” warns Teeuwe Mevissen, an economist at Rabobank. Although this meeting holds hope for an economic rebound, the actual scope of the decisions could prove limited in the absence of deep reforms or targeted action plans.

Towards a global strategy for a sustainable recovery

Alongside monetary initiatives, Chinese authorities are considering budgetary measures to stimulate weakened domestic consumption. Proposed solutions include tax reductions and strengthening social protection, tools likely to restore purchasing power to households and increase their spending. However, this strategy faces increased caution from consumers, who tend to favor services at the expense of material goods. “Spending habits have changed, which necessitates adjustments in economic policy,” states Françoise Huang, an economist at Allianz Trade. This structural evolution forces Beijing to rethink its economic policies to meet the new expectations of the population.

Persistent trade tensions with the United States further complicate this equation. Thus, the U.S. administration continues to target Chinese companies with sanctions, adding further challenges to Beijing’s economic strategy. Despite these obstacles, the Chinese government maintains its goal of 5 % growth for 2024, an ambition that reflects its desire to reassure investors and economic partners. Beyond its borders, the outcomes of this conference will have repercussions on international trade relations. Additionally, in Europe, sectors such as automotive, which are heavily dependent on the Chinese market, are closely monitoring the announced directions.

Ultimately, the success of this economic recovery will depend on China’s ability to reconcile its growth objectives with reforms suited to the structural changes in its economy. The conference could thus redefine the country’s economic priorities, as well as its role in global trade exchanges.

This conference marks a crucial step in defining China’s economic strategy and its positioning on the international stage. If concrete and ambitious measures emerge, they could reassure investors and strengthen global partnerships. However, the challenges are numerous: reviving weakened domestic consumption, stabilizing the real estate sector, all within a tense international trade context. The strategic choices made today will have profound repercussions on the Chinese economy and its influence over the next decade. Only time will tell if China can turn this opportunity into sustainable success.