What’s New

Chinese policymakers’ plans for more fiscal easing are “still lacking” when it comes to spurring the country’s low consumer confidence, one analyst says.

Why It Matters

China’s economic engines failed to roar back as much as anticipated after the end of its strict COVID-era lockdowns. The country continues to grapple with tepid consumer spending, a depressed real estate sector, high youth unemployment and other challenges.

What to Know

The Chinese Communist Party’s powerful Politburo Standing Committee, which includes President Xi Jinping, last week held its annual Central Economic Work Conference to set economic priorities for 2025.

A statement after the meeting acknowledged “complex and severe” external pressures and “increasing internal difficulties” while praising a September stimulus package for “significantly” spurring growth.

Chinese leaders have pushed for a more proactive fiscal policy, including raising the fiscal deficit and boosting government spending. This year saw significant initiatives like a $1.4 trillion package aimed at easing local governments’ hidden debt burdens. Officials have also shifted towards monetary easing, a departure from the infrastructure-driven fiscal tools previously favored by the Chinese Communist Party.

Many analysts say these efforts have not gone far enough to boost consumer spending, which in November rose by just 3 percent, official data showed, the slowest pace in three months.

What People Are Saying

Helen Qiao, Greater China chief economist and head of Asia economics at Bank of America Global Research, said in a recent interview with CNBC that whether the world’s second-largest economy hits its growth target depends on two factors: the size of government stimulus measures and the size of the “tariff shock” from incoming U.S. policies.

President-elect Trump, whose first administration launched the ongoing trade war with China, has threatened to impose tariffs of up to 60 percent on Chinese goods. Qiao said she expects the impact of any incoming tariffs to be “relatively modest.”

Qiao noted that while Beijing has announced a modest easing of monetary policy in recent months—cutting interest rates and reducing banks’ reserve requirement ratios—”support for demand in the very near future is still lacking, and we still see more room for further easing.”

She added that China is focusing on debt swaps and improving liquidity for local governments. Growth, she predicted, will continue to hinge on government stimulus.

What Happens Next

Qiao predicted that Chinese official growth would slow to 4.5 percent and then stabilize.

The country posted 5.3 percent GDP growth last year, a respectable figure, but still below pre-pandemic levels. Beijing has again set a goal of around 5 percent for 2024.

Many familiar with China’s economy, including the country’s former No. 2, Li Keqiang, have cast doubt on the accuracy of these numbers. A former Chinese central bank official, Gao Shanwen, recently suggested that Chinese GDP estimates may be inflated by as much as 3 percentage points.

Newsweek reached out to the Chinese foreign ministry with a written request for comment.