Beijing (AP) — Chinese leaders are preparing for potential economic challenges stemming from the possibility of increased tariffs under the upcoming U.S. administration of President-elect Donald Trump. To boost an economy weighed down by a property market crisis and disruptions caused by the pandemic, the ruling Communist Party of China is implementing various measures to stimulate spending by Chinese consumers and businesses. This includes addressing a decline in the value of the Chinese currency and stock markets.
Key initiatives on China’s agenda for 2025 include:
Boosting consumer spending:
China aims to expand initiatives like the cash-for-clunkers and appliance recycling programs to incentivize the purchase of new, energy-efficient products. The recycling efforts initiated last year have already resulted in the replacement of 6.5 million fuel-powered vehicles with electric and hybrid models since June. Additionally, there has been a significant increase in the sales of new appliances. The government will now offer subsidies of up to 20% on sales prices for various appliances and digital products, such as mobile phones. Furthermore, subsidies will be provided for the modernization of outdated factory equipment.
Crackdown on misconduct:
Local officials are being cautioned against engaging in unwarranted “arbitrary inspections” that disrupt normal business activities. Hu Weilie, a vice minister of Justice, emphasized the need to prevent abuses of power, arbitrary asset seizures, and unjustified production halts. These measures are part of a broader effort to enhance China’s business environment and curb instances of local governments extorting companies for financial gains.
Stimulus plans:
While China has refrained from implementing significant stimulus packages, preferring a more targeted and gradual approach, Zhao Chenxin, head of the National Development and Reform Commission, revealed plans to introduce substantial long-term treasury bonds for financing future expenditures. Specific details will be disclosed during the upcoming annual session of the national legislature in early March.
Currency stabilization:
The central bank of China has affirmed its commitment to maintaining the stability of the yuan and stabilizing financial markets. Recent fluctuations have seen the yuan weaken against the U.S. dollar and other currencies, impacting China’s financial landscape. Efforts are being made to safeguard the currency’s value to prevent further market disruptions.
Economic narrative:
The Chinese government tightly controls public discourse, particularly discussions related to the economy. Social media accounts of economists critical of government policies have been shut down, as authorities aim to shape a narrative supportive of President Xi Jinping’s leadership. The emphasis is on promoting “correct public opinions” that align with the government’s economic strategies.
Public opinion of unity and progress.”But talking up the economy can obscure hard realities, said a recent report by the think tank Rhodium Group, which estimated China’s actual economic growth last year at 2.4% to 2.8%, well below the official estimate of about 5%. One big factor behind the lower-than-hoped-for growth is pocketbook issues that crimp demand, such as falling housing prices and smaller paychecks. The report also said: “No substantial policy measures have been announced that will substantially change the employment or wage outlook.”
