On March 5, 2025, the State Council Information Office holds a press briefing in Beijing about the Report on the Work of the Government. [Photo by Liu Jian/China SCIO]

China unveiled a more proactive and effective macro policy approach in this year's government work report, delivered by Premier Li Qiang on Wednesday, marking a significant shift in its fiscal and monetary strategy to sustain economic momentum amid domestic and global challenges.

At a press briefing following the report's release, Chen Changsheng, a member of the report drafting team and deputy director of the State Council Research Office, said the shift builds on policy adjustments introduced last September, when the government rolled out a slew of measures to restore confidence and drive recovery.

For the first time in 14 years, China is moving from a prudent monetary policy to an appropriately accommodative monetary policy, in addition to introducing a more proactive fiscal policy, Chen said. 

Chen Changsheng, a member of the government work report drafting team and deputy director of the State Council Research Office, attends a press briefing in Beijing, March 5, 2025. [Photo by Xu Xiang/China SCIO]

China's decision to adjust macroeconomic policies is driven by both internal and external factors. The rising external uncertainties and insufficient domestic demand, particularly weak consumption, make it necessary to strengthen counter-cyclical adjustments through macroeconomic policies, Chen said. China's relatively low government debt levels and low inflation provide ample room for fiscal and monetary adjustments, he added. 

According to Li's government work report, China plans to raise its deficit-to-GDP ratio by one percentage point to 4%, pushing the total deficit to 5.66 trillion yuan (US$790 billion). The government will also issue 1.3 trillion yuan of ultra-long special treasury bonds and 4.4 trillion yuan of local government special-purpose bonds, both marking new records. In total, new government debt will reach 11.86 trillion yuan, an increase of 2.9 trillion yuan over last year, enabling a notably higher level of spending.

Moreover, the government has also vowed to fully leverage the role of monetary policy instruments in adjusting both the monetary aggregate and structure, make timely cuts to required reserve ratios and interest rates, and maintain adequate liquidity.

This photo taken from Jingshan Hill on Aug. 12, 2024, shows the skyscrapers of the central business district on a sunny day in Beijing. [Photo/Xinhua]

Chen underscored the importance of early policy implementation to maximize impact. "Policies should be put in place as soon as possible — better early than late — to stay ahead of uncertainties. Once a decision is made, support should be delivered in full to ensure the strongest effect."

He also highlighted the need for better coordination across policies and departments to create a combined impact greater than the sum of individual actions.

Beyond fiscal and monetary adjustments, Chen said the government work report highlights several innovative approaches in macro regulation. These include pursuing people-oriented macro policies, promoting synergy between consumption and investment, ensuring stability in the real estate market and the stock market, and using more resources to serve the people and meet their needs.

"By fostering a virtuous cycle between economic growth and social well-being, we can better promote high-quality development," Chen said.

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