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The View | China to steer a steady economy amid structural and geopolitical challenges
- Its 2024 economic strategy blends ambition and caution, aiming for growth and stability amid uncertainty. The effectiveness of its policies and global dynamics will be critical
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China’s strategic positioning for 2024 reveals a multifaceted approach aimed at stabilising and enhancing its economic structure. Its economic blueprint is heavily predicated on the implementation of proactive fiscal policies designed to catalyse the growth of strategic hi-tech sectors.
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This is not merely a financial manoeuvre but a deliberate stratagem to pivot towards high-quality development and a uniquely Chinese modernisation in the context of great power competition. The state’s intervention in funding strategic national hi-tech initiatives is a testament to its commitment to technological self-reliance.
Efforts in clean energy and low-carbon development will include environmental taxation policies and green government procurement to meet 2030 and 2060 carbon goals.
Fiscal policies will support innovation in particular, with incentives like additional deductions for research and development, tax reductions for key industries, and personal tax benefits for the conversion of scientific and technological achievements. Advanced manufacturing will benefit from investment-linked tax incentives, which include value-added tax credit refunds and the accelerated depreciation of fixed assets.
China’s monetary policy for 2024 is set to leverage structural monetary tools to bolster the digital economy, which represents a substantial portion of the economy. The People’s Bank of China (PBOC) is poised to guide financial institutions in directing credit towards specific industries, thereby reducing financing costs and stimulating growth in pivotal sectors such as tech innovation, advanced manufacturing and green development.
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However, the success of these policies is contingent upon many variables that extend beyond the immediacy of policy implementation. For example, even if all the policies are fully implemented, technological breakthroughs generally require a lengthy incubation process and cannot be easily achieved in the short term. From the perspective of international competition, some industries in China will continue to be “choked” by foreign countries.
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