(Yicai) Jan. 21 -- China's economy could expand by 4.9 percent this year, driven by pro-growth policies, according to chief economists polled by a think tank under Yicai Media Group.

Ranging from 4.6 percent to 5 percent, the average prediction for growth in China’s gross domestic product is 4.9 percent for 2025, per the survey of 14 chief economists conducted by the Yicai Research Institute.

China’s GDP expanded 5 percent to CNY134.9 trillion (USD18.4 trillion) last year, meeting the annual economic growth target, after the government rolled out the biggest stimulus package since the Covid-19 pandemic from later September. It has yet to set this year’s target.

Setting the goal at “around 5 percent” again this year would be reasonable given the shift toward a more supportive economic policy environment, the economists said.

The government has pledged to implement a moderately loose monetary policy for 2025, adjusting and optimizing the pace and intensity as necessary, along with a more proactive fiscal policy, including a rare increase in the fiscal deficit ratio.

The economy is likely to show an N-shaped or inverted V-shaped trajectory over the year, said Zhao Wei, chief economist of Shenwan Hongyuan Securities. Gains in investment and consumption are expected to pick up a little on last year, with exports making a smaller contribution, he said.

Cai Wei, chief strategy officer at KPMG China Advisory, said China faces a complex and challenging internal and external environment. A relatively high growth target would help guide economic efforts, steady market expectations, and boost confidence, Cai added.

Supported by a series of growth-stabilizing policies, the economists expect China's inflation gauges to rise. The consumer price index may rise 0.3 percent, more than last year's 0.2 percent increase, and the producer price index could fall 2.1 percent, rising from the prior year’s 2.2 percent decline.

Growth in industrial added value could slow to 5 percent from 5.8 percent in 2024, while retail sales of consumer goods could climb 4.8 percent from a 3.5 percent gain.

Investment in infrastructure and equipment is predicted to accelerate. Due to policy support, annual fixed-asset investment could rise 4.3 percent, while that in real estate development could drop 7.3 percent, compared with last year's 3.2 percent increase and 10.6 percent decrease, respectively.

Based on overseas experience, China's real estate sales are gradually approaching the bottom, and the decline in sales and investment is expected to narrow this year, according to Lu Zhengwei, chief economist of Industrial Bank. Manufacturing investment may slow slightly, while infrastructure investment may see a moderate uptick.

The chief economists believe that global trade will maintain a moderate recovery trend this year, with major challenges coming from geopolitical risks and trade protectionism.

Lian Ping, chief economist at Zhixin Investment Research Institute, said China is expected to set a fiscal deficit ratio of 4 percent or higher this year, exceeding CNY5.5 trillion (USD755.8 billion). The scale of ultra-long-term special government bonds is expected to increase by more than CNY2 trillion. Additionally, the quota of local special bonds is expected to rise above CNY4.5 trillion. Combined with the CNY2 trillion debt resolution quota, the total will exceed CNY6.5 trillion.

Fiscal policy will be more active, with a deficit-to-GDP ratio of 3.5 to 4 percent, said Wang Han, chief economist at Industrial Securities. The nation will issue CNY1.5 trillion to CNY2 trillion of ultra-long-term special government bonds, and CNY4 trillion to CNY4.5 trillion of special bonds. 

Moreover, the central bank could implement one reserve requirement ratio cut and two interest rate reductions, Wang said.

(The author is a researcher at the Yicai Research Institute.)

Editor: Emmi Laine