A package of incremental policies has been implemented at an accelerated pace, boosting the economy’s momentum

Those who have been promoting the narrative of “China’s decline” and expressing skepticism about the country’s future may soon realize they were mistaken once again.

According to the National Development and Reform Commission (NDRC), nearly half of the incremental policies have already been implemented, with the rest expected to accelerate in rollout. With economic growth rates of 5.3%, 4.7%, and 4.6% in the third quarter, these incremental policy measures are anticipated to help steer the economy towards a “V” shaped recovery in the fourth quarter, despite ongoing downward pressures.

Starting from September 24, five major press conferences were held consecutively, unveiling a carefully planned package of incremental policies. This timely and forceful response has garnered attention in global markets, signaling a shift in the trajectory of China’s economy.

As a result of the combination of existing and new policies, several economic indicators showed marginal improvement in September, particularly with consumer spending increasing by 1.1 percentage points. Notably, the “Two New” policies—large-scale equipment upgrades and trade-in incentives for consumer goods—have proven effective, reversing earlier declines in key metrics. This marks the first positive growth in national passenger car retail sales in six months, alongside a rebound in home appliance sales.

Critics who claim that “China is unwilling to boost consumption demand” have failed to grasp the reality of China’s macroeconomic policy adjustments. By focusing more on addressing shortcomings, improving living standards, and stimulating consumption, the government aims to boost confidence among families and private enterprises, thereby expanding demand.

Measures to invigorate the capital markets are designed not just to stabilize the stock market but also to leverage wealth effects to foster consumer spending. Reducing existing mortgage rates is among the strategies aimed at stabilizing the real estate market.

Investment figures also reflect a positive trend. The national budget includes a plan for 100 billion yuan in central budget investments and an additional 100 billion yuan for major strategic initiatives and security capacity building projects, allocated in advance. In the first three quarters, national fixed asset investment grew by 3.4% compared to the previous year—signifying the first stabilization in growth rates after months of decline since April.

According to Sheng Lei, Deputy Director of the Investment Research Institute at the NDRC, this performance underscores the effectiveness of macroeconomic policies and highlights the robust resilience and vast potential of China’s economic development. Despite global complexities and a vast baseline, achieving an investment completion of 37.9 trillion yuan in the first three quarters is a noteworthy accomplishment.

Early indicators from October suggest a stabilization and positive changes in the economy. During the National Day holiday period, new residential transactions doubled year-on-year, and domestic tourist spending growth outpaced visitor counts. In early October, prices for 33 out of 50 key production materials rose, with three remaining steady.

These encouraging signals indicate that the incremental policies are taking effect and are likely to yield even greater benefits in the fourth quarter. The NDRC has indicated that more policies will be announced soon. These include increasing student aid standards, broadening coverage, raising loan limits for undergraduate and graduate students, and expanding the areas for special bonds.

The package of incremental measures is a comprehensive approach focusing not only on boosting economic growth quality but also ensuring the health of the real economy and business entities. Balancing speed, quality, and security will require significant wisdom. The success of this series of measures demonstrates China’s determination, strategy, and ability to maximize policy effectiveness.

Sheng emphasized that the incremental policy efforts not only deliver immediate results but also affirm the commitment and execution power of macroeconomic policies in promoting long-term economic stability. As expectations improve, momentum is quickly building.

The NDRC will closely monitor changing conditions and explore new incremental policies as needed. Additionally, new reform measures are being rolled out, including revisions to the encouraged industries for foreign investment and guidelines for optimizing state-owned enterprises’ structure.

The incremental policy initiative is far from over, as new opportunities for China’s economic development continue to emerge, awaiting those wise enough to navigate through the uncertainties.