Markets have responded positively to signals from China's annual Central Economic Work Conference, which outlined more proactive policies aimed at stimulating demand and ensuring steady economic growth, said Ding Shuang, Chief Economist for Greater China and North Asia at Standard Chartered, on Friday.
The latest conference, held from Wednesday to Thursday in Beijing, set the tone for China's economic priorities in 2025. Many of its key messages, including a focus on boosting domestic consumption and stabilizing growth, echoed those from the recent meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee earlier in the week.
Speaking to CGTN, Ding highlighted the conference's emphasis on proactive fiscal measures, noting that these key policy directions were well-received by the market.
"I would say the message beat the expectation, by proposing more proactive macro policies, and including a shift of the monetary policy stance from prudent to appropriately loose stance, so that gives the market a lot of room for imagination, and also including a more proactive fiscal policy, as well as stabilization of the housing and the stock market. So that's why I think the market responded very positively," he said.
Ding pointed to promising economic indicators as evidence that China is on track to achieve its 2024 growth target of five percent.
"Both the soft data, including the manufacturing PMI and the hard data, for example, the industrial production and retail sales, suggest that we may see a rebound of the economy in the fourth quarter. And the Political Bureau sounds very confident that the growth target of 2024 will be achieved," he said.
Despite the optimism, Ding warned of ongoing challenges, particularly subdued domestic demand and risk of over-reliance on exports.
"That being said, we continue to see quite weak domestic demand and the economy benefited a lot from foreign trade this year, with exports outperforming imports. We estimate that about 20 percent of the 2024 growth comes from contribution of net exports," said the economist.
Looking ahead, Ding viewed potential trade tensions with the United States as a major risk, particularly under a second Trump administration. However, he believes that China is now better positioned to navigate such challenges.
"The risk of trade war is the biggest risk for China's economy for 2025. But in the meantime, I would say China appears to be better prepared this time around. On one hand, the government is likely to introduce a more expansionary policy to boost domestic demand to offset the high tariffs. On the policy side, we think the government is better prepared and the fiscal deficit is likely to be widened for next year and more central and local special bond issuance is likely to be planned," he said.
He also underlined the diversification of China's trade and investment strategies as a key buffer against U.S. tariffs.
"On the other hand, China's corporate sector has been diversifying trade and investment globally and their reliance on the U.S. market has declined. Today, Chinese goods and services appear to be embedded in the global supply chain. So, as long as the U.S. continues to run a trade deficit and continues to import from the rest of the world, goods produced in China or goods with Chinese content produced elsewhere will most likely find their way into the U.S. market," said the economist.
China's proactive economic policies drive market optimism: economist
