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.
In 2024, China will continue to implement city-specific policies, enhance the people-oriented nature of real estate, and increase financial support for the construction of affordable housing. Notably, a December 27 PBOC policy conference talked about “equally satisfying the reasonable financial needs of different property developers”.
This statement is crucial. It emphasises the impartial treatment of state-owned and private enterprises. Theoretically, this is a very positive signal for private firms with financing needs.
The term “reasonable” has two main implications. One is continued support for the financing needs of real estate companies, which hope to see some relief next year. The other is that policymakers aim to prevent too much financial flow into the industry, reflecting the government’s strategy of supporting without over-promoting.
Painful as it is, China must break its property-speculation habit
Painful as it is, China must break its property-speculation habit
However, relaxation of purchase restrictions is one of the most impactful policy measures for first-tier cities. Thus, any relaxation is expected to be cautious and likely to start in peripheral areas instead.
Land and housing prices are expected to rebound in some core urban areas of first-tier and second-tier cities, but the increase will be modest, and significant fluctuations are unlikely for the year.
In summary, China’s 2024 economic strategy is a blend of ambition and caution, aimed at stability and growth amid uncertainties. The effectiveness of its policies and global dynamics will be critical. Policymakers, investors and observers must grasp these nuances as China’s decisions affect the global economy.
As China charts its course, the global community watches with bated breath, anticipating the reverberations of its economic decisions on the international stage.
Yuhan Zhang is a scholar based at UC Berkeley specialising in China’s political economy. He is also an adjunct assistant professor at the G20 Center of Beijing Foreign Studies University’s International Business School