Once a year, on the eve of the Central Economic Work Conference, the Political Bureau held a meeting on December 9 to analyze the economic work for the coming year and proposed to implement more proactive fiscal policies and moderately relaxed monetary policies. As early as December 6, Xi Jinping emphasized during a symposium with non-Communist Party persons hosted by the Central Committee that in 2025, the “14th Five-Year Plan” will be a crucial year for perception and employment, and it is necessary to implement more proactive macroeconomic policies, expand domestic demand, stabilize the real estate and stock markets… to high-quality complete the goals and tasks of the “14th Five-Year Plan” and lay a solid foundation for a good start to the “15th Five-Year Plan”. However, in the face of various difficulties of so-called economic downturn, what clever tricks does the Central Committee plan to propose to stimulate economic growth? The recent Politburo meeting provided an answer: implement more proactive fiscal policies and moderately relaxed monetary policies, and strengthen extraordinary counter-cyclical adjustments.
“Proactive fiscal policy and prudent monetary policy”—these have been touted as the “magic weapons” by various propaganda agencies of the Central Committee for many years. As early as 1998, to respond to the Asian financial crisis, the Central Committee announced the adoption of “proactive fiscal policy”. In 2008, facing the global economic crisis, the Central Committee once again promoted Keynesianism on the stage, announcing the launch of “proactive fiscal policy”. This is nothing more than a policy to supplement relatively unstable private investment through government-managed investment, raising funds for public investment by borrowing, in other words, implementing a “budget deficit fiscal policy”.
However, the Central Committee has never been willing to tear off its “red cover” but instead packages its fiscal policy as “serving the people”. The Chinese Academy of Fiscal Sciences wrote an article in 2023 titled “Proactive Fiscal Policy: A New Logic of China’s Practice”, shamelessly glossing over the Central Committee’s fiscal policy. The article pointed out that Western Keynesian policies have roughly the same goals and methodological foundations; as the situation develops, the explanatory and guiding power of this logic for social practice is continuously declining… Under the impact of the COVID-19 pandemic, large-scale fiscal stimulus measures in some Western countries have faced many development challenges and difficulties, also shaking the traditional fiscal policy theory.
Official economists of the Central Committee superficially criticize Keynesianism, but in reality, they reveal their pessimism and madness between the lines: Keynesianism may no longer be feasible, but it must continue to be revised—how to more effectively leverage fiscal policy has become a major theoretical and practical issue for governments worldwide.
However, no matter how much the Central Committee embellishes its “socialist characteristics,” it cannot hide the capitalist essence of its fiscal policy, which is also reflected in the policy changes of the Central Committee itself. Historically emphasizing “moderation,” the Central Committee had to propose a “more proactive fiscal policy” during this Politburo meeting, mainly to further increase fiscal deficits and expand government investment. As the year-end approaches, cities like Harbin and other “tourist hotspots” hurriedly announced various tourism projects and ticket prices, Sichuan implemented “up to 500 yuan subsidies” and “on-the-spot riding” electric vehicle replacement plans… all these “expanding domestic demand” measures are ultimately aimed at further supporting the monopolistic bourgeoisie amid the economic crisis.
As for “prudent monetary policy,” it was implemented in 2010, during the aftermath of the 2008 economic crisis. Economists of the Central Committee, like their predecessors, attempted to implement “moderate” inflation. However, the king cannot command the economy, and faced with declining GDP growth rates, these economists are at their wits’ end and have had to intensify inflation. It is reported that recent mainland and Hong Kong regulators have asked some large investment banks to help accelerate the listing of Chinese mainland enterprises in Hong Kong, clearly pushing these banks to speed up and turn on the printing presses. The increasingly desperate Central Committee has even turned its eyes to issuing commemorative coins. On December 9, the People’s Bank announced that starting December 16, it will issue the 2025 New Year commemorative coins and commemorative banknotes, including a bi-metallic copper alloy commemorative coin with a face value of 10 yuan, with a total issue of 100 million pieces, and a commemorative banknote with a face value of 20 yuan, also with 100 million issued. All are legal tender. Since the beginning of this year, China’s five-year loan prime rate has dropped from 4.20% to 3.60%, the largest decline in recent times. However, even such a rate cut cannot face the current economic depression, so the Central Government had to reintroduce the “moderately relaxed monetary policy” from 2008 at the Politburo meeting, further increasing inflation.
It is evident that in response to the economic crisis, and seeing the upcoming U.S. President Trump’s new round of trade wars next year, the Central Committee has proposed numerous “reforms” of “fiscal policies” and “monetary policies,” or increased foreign investment and further trade protection policies. Ultimately, there are no new tricks—just increased support for the monopolistic bourgeoisie. The ultimate backers of these flashy economic policies can only be the working people. But today, as Chinese workers and peasants become increasingly impoverished, how many more glasses of Keynesian poison can they still drink?
