Housing Crisis And Unemployment : China’s 2025 Roadmap

China is at a pivotal economic turning point. As the combined effects of weak consumption, an intensified real estate crisis, and high unemployment hinder its development, Beijing has just announced an ambitious budget policy for 2025. The stated objective is clear: to stimulate domestic demand and stabilize an economy under significant pressure. To achieve these ambitions, the government plans a substantial increase in public spending, coupled with a revision of its fiscal priorities. These measures, detailed during a national conference, reflect a firm commitment to support local communities, expand social benefits, and strengthen the resources of struggling businesses. Such a strategy, centered around innovation and strategic technologies, also aims to revitalize trade exchanges in order to adapt the debt rules. With this comprehensive approach, Beijing intends to lay the foundations for a more resilient economic growth and address the structural challenges that impede its trajectory.

An increase in deficits to revive consumption

China has announced a budget policy described as “more active” for the year 2025, marking a significant change in its economic management. This decision was presented following a two-day national conference on budgetary work, which concluded this Tuesday, December 24, 2024. According to Finance Minister Lan Fo’An, this new orientation aims to “promote consumption” in order to strengthen the financial resources of local communities. In a context of fragile domestic demand, these initiatives aim to give a boost to an economy in search of stability.

To achieve this goal, the government plans to increase state bond issuances, provide increased financial support to local governments, and reassess social benefits. These measures are in addition to previous efforts, such as reducing interest rates and easing debt rules. However, these initial reforms have proven insufficient in the face of major structural challenges, particularly a sustained crisis in the real estate sector and high youth unemployment. Thus, the new budget plan aims to overcome these obstacles and pursue a growth target set at 5 % for 2025. This ambition remains cautious, as the IMF estimates that growth could level off at 4.5 %, reflecting the limits of current economic measures.

An industrial and technological strategy at the heart of the recovery

The new Chinese budget plan, while emphasizing social measures, fits into a broader strategic vision aimed at consolidating the role of industry and technology at the heart of the national economy. Thus, President Xi Jinping has highlighted the paramount importance of innovation and technological development to enhance the country’s competitiveness. This priority is accompanied by fiscal and monetary relaxations aimed at alleviating pressure on struggling businesses and stimulating exports, still considered a central pillar of economic growth.

At the same time, this budgetary orientation expresses a clear ambition to redirect the economy towards high value-added sectors. Through the diversification of its growth engines, China seeks to reduce its dependence on domestic consumption, which remains below pre-pandemic levels. However, critical voices are being raised among economists, who warn against the limits of these reforms. According to them, without direct actions to support households and boost demand, the impact of these measures risks remaining partial. Long-term results will therefore depend on Beijing’s ability to balance structural investments and immediate support for consumption, and to maintain an ambitious course to deeply transform its economy.

Through the consolidation of its budgetary policy, China demonstrates its determination to overcome a global situation marked by uncertainty. However, this ambition is not without risks. Challenges related to rising debt and internal economic imbalances could undermine the anticipated results. On the international stage, this strategy could reposition Beijing as a key economic player capable of influencing global trade interactions. However, China’s ability to translate these intentions into concrete results will depend on the effectiveness of the reforms initiated and their compatibility with the expectations of markets and households. The success or failure of this economic gamble could well redefine the contours of Chinese growth for the years to come.