Lian Ping Photo: Courtesy of Lian Ping

Given the external pressures and uncertainties facing China's economy this year, the Communist Party of China (CPC) Central Committee Political Bureau meeting on Wednesday emphasized the general principle of seeking progress while maintaining stability to realize major priorities such as stabilizing employment, businesses, markets, and expectations.

The meeting demonstrated proactive responses to economic challenges and provided important guidance to ensure the stable performance of China's economy in 2025 - the concluding year of the 14th Five-Year Plan (2021-25) - and to lay a solid foundation for the 15th Five-Year Plan (2026-30). The policy signals released from the important meeting merit close attention.

The tone and emphasis of the meeting are consistent with the emphasis set during the two sessions earlier this year and the April meeting of the CPC Central Committee Political Bureau.

In the first half of 2025, China adopted a macro policy approach of "acting early rather than late," rolling out a series of coordinated policy measures. These helped the country achieve a 5.3 percent year-on-year GDP growth rate in the first six months, with major economic indicators performing well, laying a solid foundation for reaching the full-year growth target.

Recently, the IMF raised its forecast for China's 2025 GDP growth to 4.8 percent, up by 0.8 percentage points from its April gauge. Such a large upward revision is rare in past IMF updates and reflects the optimistic outlook of major international institutions on China's economy. 

To some extent, China's economic growth still faces challenges. Additional targeted policy measures are needed to stimulate activity across different sectors. In the second half of the year, policymakers are expected to step up efforts to unleash endogenous growth momentum, accelerate the development of new quality productive forces, promote deeper integration of technological and industrial innovation, energize market players, lower financing costs, and expand high-level opening-up to the outside world. These efforts will maintain steady economic growth.

With a population of 1.4 billion and more than 400 million middle-income earners, China boasts significant structural advantages. It is home to 240 million people with higher education or professional skills and produces a large group of STEM graduates each year. China is not only the world's second-largest consumer market but also the only economy with a complete industrial system. 

In areas such as high-speed railway, power equipment, new energy, and telecommunications, the country holds a systemic leading edge. And, the strengths go far beyond, as their synergy creates a powerful composite advantage that gives China strategic certainty and confidence in realizing the set targets for development.

To effectively boost and unlock domestic demand, the meeting emphasized the need to "spur consumption demand while securing and improving people's livelihood." This highlights the continued focus on expanding domestic market demand, as previously stressed during the two sessions and the April meeting.

In the first half of the year, retail sales expanded by 5 percent year-on-year - 1.5 percentage points higher than the 3.5 percent figure of 2024. Domestic consumption contributed 52 percent to GDP growth, continuing to serve as a key engine of growth.

In the second half, as fiscal and monetary resources are increasingly allocated and deployed, policies aimed at increasing household incomes and overcoming barriers in key industries will be rolled out more quickly. Efforts to advance major infrastructure and innovation projects are expected to be accelerated. Domestic services consumption - including tourism, telecommunications, healthcare, and eldercare - are expected to gain pace. 

The meeting specifically noted the need to "stimulate the vitality of private investment, and expand effective investment." 

Since the start of the 14th Five-Year Plan (2021-25) period, the private sector has played a crucial role in investment, especially in high-end equipment manufacturing. It has also shown strong momentum in technological innovation. In the first half of the year, private investment (excluding real estate development) grew by 5.1 percent year-on-year, marking steady growth and providing a strong foundation for overall fixed-asset investment.

In the second half of the year, with the support of various policies, investment is expected to expand steadily. Benefiting from the issuance of special treasury bonds and local government special bonds, infrastructure investment will continue to serve as a stabilizing force for the economy.

Funding from ultra-long-term special treasury bonds will accelerate construction of major infrastructure projects, while investment in equipment manufacturing and high-tech industries is expected to keep humming. Private-sector confidence will recover, playing a bigger role in driving domestic market demand and acting as a ballast to bolster economic resilience.


The author is director and chief economist of the Guangkai Chief Industry Research Institute. bizopinion@globaltimes.com.cn