The overall framework of macroeconomic policies is unlikely to change significantly, with the focus being on the pace and direction of implementation.
The December Politburo meeting traditionally sets the stage for economic planning in the following year, serving as a precursor to the Central Economic Work Conference. The meeting's communiqué provides insights into the core priorities and top concerns for next year's economic agenda.
First, the communiqué reiterated the need to "better coordinate domestic economic efforts with international trade challenges," a phrase initially introduced in April's Politburo meeting. Despite recent stability in external trade conditions, this reaffirmation carries significant strategic weight. Domestic economic growth and international trade are mutually reinforcing yet require distinct approaches. When trade tensions escalate, greater emphasis must be placed on stabilizing the domestic economy, while periods of eased tensions allow for advancing structural reforms and other medium-to-long-term initiatives. This offers a reference point for anticipating next year's incremental policy adjustments.
Compared to last year's economic work conference, the communiqué introduced new directives to "develop new quality productive forces based on local conditions and deepen the construction of a unified national market." This signals that optimizing local government conduct, regulating market competition, and addressing excessive internal competition (colloquially termed "anti-involution") will be key priorities next year.
Second, the communiqué called for "a strong start to the 15th Five-Year Plan," indicating policymakers' commitment to maintaining economic growth. The 2024 GDP target is likely to remain around 5%, requiring full utilization of existing policies and the introduction of new measures. The recent announcement of a 500 billion yuan financial instrument, primarily for project investments, suggests that next year's economic momentum may initially rely on investment-side policies to achieve a robust opening.
The communiqué emphasized "implementing more proactive and effective macroeconomic policies, continuing with proactive fiscal policy and appropriately accommodative monetary policy," mirroring last December's Central Economic Work Conference statement. It also highlighted "strengthening counter-cyclical and cross-cycle adjustments," implying that while the broad fiscal stance will remain unchanged, fiscal policy space may see modest expansion.
Third, the re-emphasis on "cross-cycle adjustments" and the call to "leverage the combined effects of existing and incremental policies" suggest that policy timing will be crucial next year. If external conditions remain stable, policymakers will prioritize optimizing existing tools, but stronger incremental measures can be deployed if circumstances change.
Incremental policies will focus more on domestic demand and livelihoods. For the second consecutive year, the communiqué prioritized domestic demand as the top economic agenda item, urging adherence to "domestic demand-driven growth" and further stressing "putting people's livelihoods first," aligning with the spirit of the Fourth Plenum. The 15th Five-Year Plan proposal advocates "expanding domestic demand as a strategic cornerstone, improving livelihoods, and boosting consumption" to foster an economic model increasingly driven by domestic demand, consumption, and endogenous growth. The communiqué's mention of "building a strong domestic market" underscores its role as a buffer against external uncertainties and a foundation for development autonomy. This requires greater policy resources toward livelihood improvements, human capital investment, expanding quality consumption supply, and removing restrictive consumption policies to enhance households' spending capacity and willingness.
Fourth, the communiqué outlined eight key tasks for next year under the "Eight Priorities" framework. Compared to last year's Central Economic Work Conference, the top four priorities remain unchanged: domestic demand, technology/industry, reform, and openness. Risk prevention, ranked fifth last year, dropped to eighth, suggesting that systemic risks have largely been addressed after years of efforts. Last year's sixth and seventh priorities—urban-rural/regional development—were consolidated into fifth place as "urban-rural integration and regional coordination." Green development/carbon reduction (sixth) and livelihoods (seventh) retained their positions.
Notably, the real estate sector—once the top systemic risk—was not mentioned in the communiqué. Input-output table estimates show real estate's direct contribution to nominal GDP declined from 17.7% in 2017 to an estimated 9.9% in 2025, with a further drop to 9.0% projected for next year—about half its 2017 share. As the sector's downturn approaches a new equilibrium, stability is expected in 2024.
Risk Factors: The Central Economic Work Conference has yet to convene, leaving potential gaps in interpreting the Politburo meeting's economic agenda. External conditions remain complex and volatile, which may disrupt domestic economic work and policy sequencing.
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