According to the finance minister, China plans to increase its deficit in 2025 to boost spending, aiming to support its struggling economy.

China plans to raise its fiscal deficit in 2025 to boost spending, aiming to support its struggling economy, as announced by Finance Minister Lan Fo’an.

The country has faced slow domestic consumption, a property crisis, and rising debt, prompting measures like rate cuts, easing homebuying rules, and supporting local governments’ finances.

Economists call for more fiscal stimulus to revive domestic consumption and improve economic health.

Beijing will focus on improving livelihoods and aiding indebted local governments through increased transfer payments.

China’s leadership is shifting toward a “moderately loose” monetary policy and a “more proactive” fiscal policy in 2025, moving away from cautious spending approaches.

The government aims for 5% growth this year, but many economists, including the IMF, project slightly lower figures for 2024 and 2025.

Analysts suggest new spending measures may prioritise managing growth over significantly boosting it.

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