BANGKOK — China is adjusting its economic policies to stimulate growth as it prepares for potential challenges in its relationship with the United States under the upcoming administration of President-elect Donald Trump. One significant move includes granting a 20% price advantage for made-in-China goods in transactions with the Chinese government, aimed at boosting local manufacturers.
These policy adjustments are being made in advance of an important annual economic planning conference scheduled for next week, which will outline China’s economic strategy for the upcoming year. The Ministry of Finance has invited public input on the made-in-China initiative until January 4. To take part in this program, products must be entirely produced in China, including all raw materials used in manufacturing, although certain components can meet domestic production standards. Notably, agricultural, forestry, mineral, and fishery products are excluded from this initiative, according to reports from the state-operated Xinhua News Agency.
In major economies, government procurement typically represents around 10% or more of overall business activities. The proposed program will allow companies to enjoy a significant 20% price discount, with the government covering the shortfall. This initiative is part of a broader strategy meant to bolster sales while also facilitating financing for e-commerce and smaller enterprises known as “little giants” and “hidden champions,” along with enhancements to insurance underwriting.
Chinese stock markets have seen a considerable rise this week, buoyed by investors’ hopes that the forthcoming economic planning meeting will provide more support to counter the slowdown in the economy. A recovery in exports is expected to help balance out challenges presented by the sluggish property market and weak consumer spending. The Hang Seng index in Hong Kong and the Shanghai Composite both recorded increases of more than 2% during the week.
Prior to the crucial meeting in Beijing, Premier Li Qiang is set to convene a discussion on Monday with leaders from ten major international organizations, including the World Bank, International Monetary Fund, and World Trade Organization, as indicated by the Foreign Ministry on its website.
The themes for the discussion will revolve around advancing “global common prosperity,” “upholding multilateralism,” and fostering further reforms and modernization within China.
The Chinese leadership has set an economic growth target of “around 5%” for the year, with growth averaging 4.8% over the first three quarters, indicating a gradual slowdown. Recently, regulators have introduced various policies aimed at reversing the downturn in the housing sector and encouraging greater consumer spending, especially as households have tightened their budgets since the pandemic.
Setting the stage for next week’s discussions, a commentary in the Communist Party’s official publication, The People’s Daily, shifted attention away from the traditional focus on growth targets, highlighting the significant environmental and resource costs of the rapid industrial development that has transformed China into the world’s second-largest economy. It noted, “If we do not break with the worship of speed… even if we momentarily increase the speed, we will undermine future growth.” The article emphasized a strategic direction that prioritizes sustainable development over mere speed.
