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China's Central Economic Work Conference (CEWC) outlined plans to enhance economic stability by raising the budget deficit, issuing more debt, and adopting a looser monetary policy in 2024. The country aims to counteract external pressures such as U.S. trade tensions and internal challenges like the property market crisis and high local government debt. The CEWC pledged active fiscal measures, including ultra-long-term treasury bonds and reduced bank reserve requirements. While specific growth targets remain undisclosed until March, analysts suggest China prioritizes economic growth over financial risks, emphasizing counter-cyclical adjustments.

Key Highlights

* China plans to increase its budget deficit and issue more debt in 2024.

* CEWC pledges proactive fiscal and monetary measures to stabilize growth.

* Measures include issuing special treasury bonds and reducing interest rates.

* Focus shifts to counter U.S. trade tensions and internal economic challenges.

* Growth target likely to remain around 5%, to be finalized in March.

China has signaled a determined push toward economic stability, with the Central Economic Work Conference (CEWC) unveiling plans to expand fiscal and monetary measures for 2024. The move includes increasing the budget deficit, issuing special long-term treasury bonds, and cutting interest rates to bolster growth amid growing challenges.

The economic outlook remains pressured by a faltering property market, high local government debt, and weakening domestic demand. Despite some resilience in exports, higher tariffs loom as Donald Trump’s return to the White House intensifies U.S.-China trade tensions. Beijing’s dovish tone reflects its readiness to stimulate growth by switching to a more flexible monetary stance and adopting counter-cyclical adjustments.

Supporting this strategy, CEWC leaders vowed to reduce bank reserve requirements and issue special local government bonds to fund infrastructure and other critical projects. Analysts noted this approach indicates a willingness to tolerate higher debt levels to prioritize growth in the near term.

Further, Beijing plans to release specific growth targets in March, with reports suggesting a likely continuation of the 5% benchmark. The CEWC emphasized the need for “appropriately loose” policies to navigate external and internal headwinds, reflecting its commitment to maintaining economic stability.

Finally

China’s 2024 strategy highlights an aggressive fiscal and monetary policy shift, prioritizing growth stability. A balanced approach between domestic needs and external pressures remains crucial

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