by Wang Kai

BEIJING, Mar 6 (China Economic Net) - China has announced a record-high deficit-to-GDP ratio of around 4% and plans to issue RMB 1.3 trillion in ultra-long special treasury bonds by 2025, signaling a more proactive fiscal policy to stimulate economic growth.

These measures were outlined in the Government Work Report delivered on Wednesday during the opening session of the third meeting of the 14th National People's Congress in Beijing.

The report also highlighted a moderately loose monetary policy, with plans to cut reserve requirements and interest rates when appropriate in 2025, alongside a GDP growth target of around 5%.

Expanding domestic demand

Liu Shangxi, former President of the Chinese Academy of Fiscal Sciences and a member of China’s top advisory body, the National Committee of the Chinese People's Political Consultative Conference (CPPCC), noted to the media that ultra-long special treasury bonds is becoming an increasingly normalized practice in China.

The planned RMB 1.3 trillion in ultra-long-term special government bonds marks an increase of RMB 300 billion over the previous year, a move expected to stimulate both investment and consumption. Additionally, RMB 4.4 trillion in special bonds will be allocated to local governments, reflecting a RMB 500 billion increase from last year.

China’s government debt-to-GDP ratio remains significantly lower than that of major economies and emerging markets. According to IMF statistics, the average government debt-to-GDP ratio for G20 countries was 118.2% at the end of 2023, while China’s stood at 67.5%.

For 2025, total newly added government debt is projected to reach RMB 11.86 trillion, marking an increase of RMB 2.9 trillion from the previous year and signaling a substantial boost in fiscal expenditure.

By focusing on strengthening its domestic economy, China is better positioned to navigate international pressures. Notably, on March 4, the Trump administration’s 10% tariffs on Chinese goods took effect. Liu commented, “With a stronger internal circulation, we can address international volatilities with domestic certainties.”

Unleashing potential of service consumption

Among the government’s priorities for 2025, boosting consumption ranks high. Liu emphasized that China’s potential in service consumption remains to be unleashed.

Currently, service consumption accounts for about 26% of China’s GDP, significantly lower than the 33% seen in other major economies in Asia and the 55% recorded in the United States.

“The elderly care industry, for example, presents vast opportunities,” Liu noted. By the end of 2024, China’s population aged 60 and above reached 310 million, accounting for 22% of the total population. This figure is expected to exceed 30% by 2035. In recent years, elderly care workers have consistently ranked among the top 100 most in-demand professions in China, according to the Ministry of Human Resources and Social Security.

“To unlock the potential of consumption, we need to increase supply,” Liu added.

The Government Work Report 2025 outlines targeted initiatives to boost consumption. Efforts will focus on diversifying supply in sectors such as healthcare, elderly care, childcare, and household services. Measures will also be formulated to enhance consumer purchasing power.