China's 2025 Economic Stimulus Measures

Stimulating consumption, injecting more capital and stabilizing the yuan are measures China is using to boost the economy this year.

To boost its slowing economy and prepare for threats of more tariffs from US President-elect Donald Trump, Beijing has rolled out a series of measures to encourage people and businesses to spend more, as well as counteract falling currency and stock prices.

Consumer subsidies

China plans to expand its trade-in programs for old cars and home appliances to encourage people to buy new, energy-efficient models. The number of home appliances that receive government subsidies will increase from eight to 12 this year, the National Development and Reform Commission (NDRC) said.

For example, microwave ovens, water purifiers, dishwashers, rice cookers and a range of passenger cars have been added to the trade-in program. Each person is also subsidized to trade in three air conditioners instead of just one. If they buy a mobile phone, they can get a subsidy of up to 500 yuan (about $70).

China’s Commerce Ministry said the expansion of the program would help stimulate spending and boost domestic demand. Beijing is spending 81 billion yuan ($11 billion) to implement it, according to the Ministry of Finance. Meanwhile, millions of civil servants across the country are getting pay raises starting this month. The extra payments are equivalent to a $12 billion to $20 billion boost to the economy.

Last year, the program, which began in June, helped replace 6.5 million fossil-fuel vehicles with electric and hybrid vehicles and boosted home appliance sales by double digits in the final few months. In total, the trade-in program boosted auto sales by 920 billion yuan ($125 billion) and home appliance sales by 240 billion yuan ($32.7 billion) last year.

In addition, this year Beijing also expanded its equipment upgrading support program for the electronic information and agricultural sectors, focusing on high-end, intelligent and green equipment.

Workers work at a Nio electric vehicle factory in Anhui province on August 18, 2022. Photo: Reuters

Additional capital injection

So far, China has not rolled out a large economic stimulus package, opting for a targeted and gradual approach.

But in mid-last month, at the Central Economic Work Conference, officials decided to increase the budget deficit - about 4% of GDP, issue more bonds and loosen monetary policy to maintain a stable economic growth rate, expected at 5%.

Zhao Chenxin, head of the National Development and Reform Commission - China's main planning agency - said the government plans to announce larger-scale issuance of long-term treasury bonds to finance spending.

Authorities plan to issue a record 3 trillion yuan ($409.19 billion) of special treasury bonds this year, Reuters reported, with the official announcement to be made at the annual session of parliament in early March.

Protect local currency

The People's Bank of China (PBOC) decided to keep the value of the yuan stable over the weekend. The yuan has weakened against the US dollar and other currencies, putting pressure on financial markets.

As of January 8, the yuan was trading at 7.3278 per dollar, down from nearly 7 yuan in early October. A weaker yuan could make Chinese exports more competitive, but it also risks angering trading partners.

In addition, the country's stock market fell again after a brief recovery in late September. The Shanghai Composite Index, after rising to nearly 3,700 points, fell to just over 3,200 points. The PBOC said it would stabilize financial markets.

Rectify inspection activities

On January 7, Vice Minister of Justice Hu Weilie said he had asked localities not to carry out "arbitrary inspections" without basis that disrupt the normal business operations of enterprises.

The new rules are aimed at preventing abuse of power, unjustified asset seizures and unjustified production halts, Xinhua said, as part of a campaign to improve the business environment, according to Premier Li Qiang. The move follows complaints that dozens of business leaders have been detained or had their assets seized by local authorities.

Boosting confidence in the economy

China is clamping down on dissenting voices on the state of its economy, according to the AP . Beijing has blocked some social media accounts of economists who criticize its policies. Xinhua recently stressed the importance of ensuring “correct public opinion” to create “a mainstream public view of unity and progress.”

Late last month, the World Bank raised its 2025 growth outlook for the country to 4.5% from 4.1%. However, it said slowing household income growth and the negative impact of property depreciation would weigh on consumption this year.

Addressing challenges in the real estate sector, strengthening social safety nets and improving local government finances are essential for a sustainable recovery, said Mara Warwick, World Bank Country Director for China. “It is important to balance short-term growth support with long-term structural reforms,” she said.