The Central Economic Work Conference was held in Beijing from December 11 to 12. The meeting analyzed the current economic situation and deployed economic work in 2025. What are the key messages and policy signals from the meeting? Jingtai interprets it for you.
Interpretation 1: Respond to external challenges and expand domestic demand in an all-round way
In the face of the adverse effects of changes in the current external environment and the current situation of insufficient domestic demand, China's economic operation is still facing many difficulties and challenges. In order to address these challenges, the meeting proposed new arrangements for "implementing more active and promising macroeconomic policies" and "expanding domestic demand in all directions".
Liu Jianxing, deputy director of the Market and Price Research Institute of the National Development and Reform Commission, pointed out that expanding domestic demand in an all-round way is not only an effective way to cope with external shocks and stabilize economic operation, but also a long-term strategy to enhance the initiative of economic development. Especially in the context of increased uncertainty in foreign trade and exports, this strategy is crucial to stabilize economic growth and promote economic restructuring and transformation and upgrading.
So, how to achieve an all-round expansion of domestic demand? The meeting put forward a series of practical measures:
Special action to boost consumption: By promoting the increase of income and reducing the burden of low- and middle-income groups, the basic pension of retirees and the basic pension of urban and rural residents will be appropriately increased to enhance the consumption capacity of residents.
Innovative consumption scenarios: Strengthen the implementation of the "two new" policies (new infrastructure construction and new urbanization), and actively develop diversified consumption patterns such as the first economy, ice and snow economy, and silver economy.
Support key projects: Greater support for the construction of major projects and key projects, and promote effective investment.
Urban renewal action: vigorously promote urban renewal and improve the quality of urban quality and the quality of life of residents.
Guo Liyan, deputy director and researcher of the Economic Research Institute of the National Development and Reform Commission, stressed that "the primary task of economic work next year is to vigorously boost consumption, improve investment efficiency, and expand domestic demand in an all-round way." She said that following the work tone of "system integration and coordination", she emphasized the all-round expansion of domestic demand, not only focusing on the virtuous circle between investment and consumption, but also focusing on the increase in income and burden reduction of low- and middle-income groups, and increasing pensions, medical insurance financial subsidies and other measures to benefit people's livelihood, aiming to systematically improve consumption willingness, ability and level. This is a comprehensive plan that combines the long and short term and treats both the symptoms and the root causes, which will help build a complete domestic demand system.
Wei Qijia, director and researcher of the Industrial Economics Research Office of the Economic Forecasting Department of the State Information Center, believes that "the expressions of 'more positive and promising' and 'all-round' first release a very positive signal, which is conducive to further boosting market confidence and development expectations." He also pointed out that the sufficient reserve of policy tools and the large space for follow-up policies demonstrate the government's determination and ability to respond to the challenges.
Interpretation 2: Comprehensively rectify "involutional" competition and promote high-quality development
The recent meeting proposed that the "involution" competition will be comprehensively rectified and the behavior of local governments and enterprises will be regulated. This is not the first time that "involutional" competition has been mentioned. As early as the meeting of the Political Bureau of the Central Committee of the Communist Party of China on July 30, it was emphasized that it is necessary to strengthen industry self-discipline and prevent "involution" vicious competition. From "prevention" to "comprehensive rectification", the attitude of the central government has become clearer, and it is expected that specific measures will be introduced one after another.
So, what is "involutional" competition?
In the macroeconomic context, "involution" refers to the homogeneous competition between enterprises or the excessive consumption of resources without bringing about productivity improvement. This trend runs counter to high-quality development and innovative development, and is a state of inefficiency and not conducive to long-term development. Liu Jianxing pointed out that this phenomenon not only wastes valuable social resources, but also hinders the innovation momentum and technological progress of enterprises.
The key to rectifying the "involution" competition
The experts interviewed generally believe that the core of rectifying "involutional" competition lies in correctly handling the relationship between the government and the market. Wei Qijia said that the comprehensive rectification of "involution" competition means giving full play to the decisive role of the market in the allocation of resources, and at the same time better playing the role of the government to ensure that fair competition promotes industrial development and avoids the distortion of price signals, so as to improve the efficiency of resource allocation and ensure the healthy and sustainable development of the industry.
Guo Liyan emphasized that the high-quality development of various regions should not rely on local protection or "involution" competition, but should be achieved through scientific and technological innovation and industrial innovation, and rely on the internal momentum of enterprises to drive growth. "Some local protectionist behaviors not only increase the cost of cross-regional operations, but also lead to the repeated expansion of homogeneous production capacity." She pointed out that it is therefore necessary to carry out targeted comprehensive rectification, standardize improper interference in market competition, optimize the governance environment of fair competition, form an economic order that is both 'live' and 'manageable', and continue to stimulate the vitality of innovative enterprises.
Liu Jianxing further analyzed that many "involutional" competitions are ostensibly corporate behaviors, but in fact they reflect the dislocation of government functions or excessive competition between local governments. He suggested that the comprehensive rectification of "involutional" competition requires standardizing and managing the local government's investment promotion policy, breaking down local protection and market segmentation, and establishing a national unified market that is efficient, standardized, fair and fully open.
Interpretation 3: The four major goals of macroeconomic regulation and control lead the economy to seek progress while maintaining stability
The meeting proposed that it is necessary to fully implement the overall requirements and policy orientation of next year's economic work, pay attention to the guidance of goals, and strive to achieve an optimal combination of stable economic growth, stable employment, and reasonable price recovery. These three objectives are closely linked and interact with each other, constituting the core framework of macroeconomic regulation and control.
Economic growth: the cornerstone of employment and price stability
Guo Liyan, deputy director of the Economic Research Institute of the National Development and Reform Commission, pointed out that maintaining stable economic growth is an important prerequisite and foundation for maintaining the overall stability of employment and prices, and the latter is a strong support for stable growth. She explained that prices reflect the result of the dynamic balance of supply and demand, and are the embodiment of the state of the production and marketing cycle. Promoting a reasonable rebound in the producer price index (PPI) will help stabilize and improve the profits of industrial enterprises, alleviate the operational difficulties of enterprises, boost confidence and enhance investment intentions; A reasonable rebound in the consumer price index (CPI) is a sign of improvement in effective domestic demand.
The internal logic of growth, employment, and prices
Wei Qijia believes that there is an inherent logical transmission mechanism between economic growth, employment stability, and reasonable price operation. "Only when economic growth is solid can employment remain stable and prices operate within a reasonable range." He emphasized that the policy emphasizes the optimal combination of the three aspects, which is actually emphasizing the organic combination of the "strength" and "temperature" of the policy. The ultimate goal of economic growth is to continuously improve people's livelihood, and employment, as the biggest livelihood issue, is crucial.
The cultivation of new drivers has helped the economy continue to rebound
With the continuous growth of new momentum, China's economy is expected to continue to rebound. Guo Liyan said, "China's long-term economic support conditions and basic trends have not changed, the implementation of existing policies, and the introduction of new policies and measures, will promote all aspects of positive factors into actual development results." She predicts that with the implementation of a number of landmark reform measures, the basic system rules of the market economy will be more perfect, which is conducive to the rapid release of effective internal and external demand potential. It is expected that the economy will maintain stable growth next year, showing a trend of "stable shape, structural optimization, and quality and efficiency", especially the new momentum and new advantages will further enhance the support for the economy.
Wei Qijia added that the factors conducive to the sustained economic recovery are accumulating. The package of incremental policies launched since the third quarter has begun to show results, the marginal improvement of major economic indicators, and the steady progress of new quality productivity have laid a solid foundation for the sustained economic recovery next year. "With the gradual effect of more active and promising macro policies, its role in boosting domestic demand will be very obvious. Coupled with the dividends we have accumulated in the process of economic restructuring and the new economic growth points currently being nurtured, it is expected that the accelerated cultivation of new drivers will play an important role in economic stability and progress in 2025. ”
Interpretation 4: Safeguard Measures for Private Enterprises and Deepening Reform Deployment
What safeguards are proposed for private enterprises?
The meeting put forward a series of powerful and effective measures, aimed at enhancing the confidence of private enterprises, reducing the burden, and encouraging bold development. These include:
Private Economy Promotion Law: The draft law has been released for public comment and is expected to be officially introduced next year. This law will not only provide a solid legal guarantee for private enterprises, play a role in consolidating the fundamentals, stabilizing expectations, and benefiting the long-term, but will also encourage entrepreneurs to concentrate on starting a business, investing with confidence, and operating with peace of mind.
Carry out special actions to standardize law enforcement related to enterprises: through special actions, standardize administrative law enforcement behaviors and ensure the healthy development of private enterprises in a fair and just environment.
Strengthen supervision and promote the healthy development of the platform economy: For the platform economy, strengthen supervision, create a healthy and orderly development environment, and support private enterprises to thrive in the field of digital economy.
These deployments will create a more stable, transparent and predictable development environment for private enterprises, and stimulate market vitality and social creativity.
What are the arrangements for further deepening the reform in an all-round way?
The meeting clarified the key tasks of deepening the reform of the economic system, and emphasized the need to give full play to the leading role of the reform of the economic system and promote the implementation of landmark reform measures. The Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) has deployed more than 300 important reform measures, which have been implemented one by one, and the results are worth looking forward to.
"To do a good job in next year's economic work, we must first strengthen our confidence in victory." General Secretary Xi Jinping recently emphasized that despite difficulties and challenges every year, we have always developed in the baptism of wind and rain and strengthened in the test. The times and the situation are always on our side, and in the face of any difficulties and challenges, it is especially necessary to maintain firm confidence.
"The road is simple, and hard work is essential." The central authorities have made clear arrangements for how to do a good job in next year's economic work, and the key to the next step is to implement them. By grasping the policy orientation, stressing the timing and intensity, and grasping all the work as early as possible, and ensuring sufficient intensity, we will be able to promote the overall stability and steady progress of the economic operation.
