China Plans to Raise Deficit and Boost Spending in 2025, Says State Media

China will raise its deficit to boost spending next year, its finance minister said Tuesday according to state media, as Beijing looks to prop up its struggling economy.

The world's second-largest economy has for years battled sluggish domestic consumption, a persistent crisis in the property sector and soaring government debt.

Beijing has unveiled a whole slew of aggressive measures this year to shore up growth -- cutting interest rates, canceling restrictions on homebuying and easing the debt burden on local governments.
Economists have urged more direct fiscal stimulus to shore up domestic consumption and restore China's economy to full health.

At a conference in Beijing on Tuesday, Finance Minister Lan Fo'an said China would "increase the fiscal deficit ratio to boost spending intensity," according to state broadcaster CCTV.
Beijing would also concentrate more on improving livelihoods and promoting sluggish consumption, Lan said, and transfer payments to indebted local governments would be increased.

Beijing has long shunned increased government spending as the antidote to an economy suffering from its economic doldrums for fear of saddling it with more debt.

But China's top leaders pledged this month to a "moderately loose" monetary policy and a "more proactive" fiscal policy next year.

The semantics marked a departure from Beijing's previous pledge to a dovish, less aggressive fiscal approach.

China is advocating for a formal national growth target of about five percent this year, which President Xi Jinping has confidently stated the nation will reach but which most economists think it will narrowly miss.

The International Monetary Fund has forecast China's economy will grow 4.8 percent this year and 4.5 percent next year.

Gary Ng, the Senior Economist for Asia Pacific at Natixis, told AFP that the extent of new spending might be "lower than it looks on the surface".

"The current policy is also more about managing growth at a reasonably comfortable range for top policymakers rather than boosting growth," Ng said.