To address ongoing economic challenges, China has implemented a series of policy measures in recent months across multiple sectors to stabilize its economy and foster recovery. These interventions have primarily focused on the property market, currency stabilization, fiscal stimulus, and financial sector support. As China navigates its recovery, these measures also have implications for global trade and the dry bulk shipping sector, as China’s demand for raw materials like coal and iron ore is closely linked to the health of its property, industrial, and infrastructure sectors.
On November 13, 2024, China rolled out tax incentives to support the property market, expanding the eligibility for a 1% deed tax reduction to apartments up to 140 square meters, effective December 1. Shortly thereafter, on November 18, Shanghai introduced additional property tax measures, such as VAT exemptions for properties held for more than two years, aimed at stimulating home sales. Meanwhile, significant financial support was directed toward the housing sector, with loans for “whitelist” development projects reaching 3.6 trillion yuan by November 2024. These policies have led to the delivery of more housing units, and have helped stabilize sentiment in China’s housing market.
Simultaneously, the People’s Bank of China (PBOC) acted to stabilize the yuan by setting a stronger-than-expected reference rate on December 4, 2024. This move was part of broader efforts to bolster confidence in the economy. In January 2025, the PBOC injected 958.4 billion yuan into the banking system to ensure liquidity amid persistent challenges in the property market. This measure aimed to stabilize the banking sector and facilitate credit flow, ensuring the government’s broader recovery efforts could gain traction.
The government’s fiscal response escalated in December 2024, when China raised its budget deficit target to 4% of GDP for 2025. This shift will allocate 1.3 trillion yuan toward fiscal stimulus, aimed at boosting consumption, supporting infrastructure development, and further strengthening the economy through special bonds.
The country’s recent efforts have paid off: China’s economy expanded by 5% in 2024, meeting the government’s target. Notably, growth accelerated in the fourth quarter, with GDP rising by 5.4%, surpassing expectations. This marked a rebound from previous quarters, with growth accelerating from 4.6% in the third quarter and 4.7% in the second quarter, signalling the positive impact of government interventions.
Looking ahead to 2025, China will announce its growth target for 2025 at the annual parliamentary session in March. The target is expected to be similar to the previous year’s goal of around 5%, based on the growth objectives set by provincial governments. Key provinces like Beijing, Shanghai, and Guangdong are aiming for growth rates of 5% or higher, while provinces like Zhejiang and Fujian have even more ambitious targets. These projections signal China’s commitment toward sustaining its recovery, despite the challenges that lie ahead.
However, the economic outlook for 2025 is not without risks. One significant threat comes from the return of Donald Trump to the White House, where on February 1st, the President announced that a 10% tariff will be applied to all Chinese imports. Such headwinds to trade flows could impact China’s export-driven economy, for which exports played a critical role in the country’s growth in 2024. There are growing concerns that, in response to these tariffs, China may need to take on more debt to maintain its growth trajectory. This could exacerbate structural issues in the economy, such as the imbalance between industrial output and consumer spending, while unemployment rates continue to rise, highlighting the challenges China faces in translating industrial and export successes into tangible benefits for consumers.
In navigating these complex challenges, China’s policymakers face a delicate balancing act between sustaining growth and addressing domestic weaknesses, and managing external risks. The road to recovery for China’s property market remains long, but as the country continues to implement its economic strategies, the dry bulk shipping sector remains hopeful that a recovery in China’s economic and property sectors could eventually boost demand for construction materials and other related dry bulk commodities. However, uncertainties—particularly regarding potential tariff increases and trade disruptions—present significant risks, not only to China’s economic growth but also to dry bulk trade flows.
