Policymakers in Beijing are planning to boost Chinese domestic demand as part of their battle against entrenched deflationary pressures and plunging investment.
Senior state planners are formulating a five year plan to lift domestic demand, acknowledging that the world's second-largest economy currently faces an imbalance between "strong supply and weak demand," according to comments from the National Development and Reform Commission to reporters on Tuesday.
In comments that reiterated earlier directives from Beijing, officials at the press briefing also pledged to further curb cutthroat business competition and rein in excess capacity this year. They vowed to better regulate local economies in an effort to build a unified national market, with a focus on improving market access, fair competition and retiring outdated production facilities.
To bolster government investment, the state planning agency said it will consider establishing a national-level fund for mergers and acquisitions to promote innovation and entrepreneurship.
Tuesday's announcements came just a day after China reported that it hit its 2025 economic growth target of around 5% despite lackluster domestic investment and consumption.
Still, China's fixed-asset investment fell 3.8% last year, as a yearslong real-estate slump stretched into another year. Retail sales, a key gauge of consumption, in December saw their slowest growth since 2022.
"We believe Beijing has become increasingly concerned about one of the worst domestic demand slowdowns in this century," said Nomura economists in note.
While Beijing has announced some supportive monetary and fiscal policies in recent weeks, economists say these are far from enough to stabilize growth.
The current enthusiasm in local stock markets could be discouraging Beijing from more vigorous stimulus, for fear of fueling a stock-market bubble, Nomura economists said. Still, they expect policymakers to rely on fiscal policy to boost demand in the near term and say Beijing could introduce measures including subsidies on new mortgage loans to help the property sector
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(END) Dow Jones Newswires
01-20-26 0022ET
