Morgan Stanley Forecasts Stronger Growth for China's Economy in 2025 Due to Government Stimulus
Amid global economic shifts, Morgan Stanley has raised its forecast for China's GDP growth in 2025 to 4.5%, an increase of half a percentage point from previous estimates. This revision comes as signs of economic recovery emerge, supported by government stimulus measures that are beginning to take effect.
Economic Stimulus and Its Impact on Growth:
The report attributes this growth revision to the positive impact of China's stimulus programs, which have significantly influenced local authorities and consumer spending. While China has maintained its official growth target at 5%, the allocation of additional financial resources compared to the previous year aims to counter deflationary pressures and mitigate the effects of increased U.S. tariffs.
Financial Plans and Expansion of Debt Issuance:
As part of its economic strengthening efforts, China has raised its targeted budget deficit to 4% of GDP in 2025, up from 3% in 2024. The government also plans to issue 1.3 trillion yuan (approximately $179 billion) in special treasury bonds, compared to 1 trillion yuan in 2024.
Additionally, local governments will be allowed to issue 4.4 trillion yuan in special debt, up from 3.9 trillion yuan the previous year. This initiative aims to boost investment and achieve greater financial stability.
Supporting Consumption and Manufacturing:
The government has allocated 300 billion yuan from special debt funds to support consumer incentive programs, including subsidies for electric vehicle purchases, home appliances, and other goods to stimulate domestic demand. Furthermore, 500 billion yuan will be allocated to refinancing major state-owned banks, while 200 billion yuan will be used to modernize manufacturing equipment, reflecting a push toward industrial modernization and technological innovation.
China's revised economic outlook highlights a strategy focused on achieving sustainable growth through increased government investment, enhanced consumption, and industrial stimulation. As Beijing continues to implement expansive financial strategies, the ability of the Chinese economy to navigate global challenges and adapt to economic shifts remains a key focus for investors and economic analysts worldwide.
