NEW DELHI: China indicated a change in policy focus towards consumption for 2025 - increasing state borrowing and spending. The country stepped up its stimulus efforts to recharge the economy next year in anticipation of impending US tariffs.

Top officials led by President Xi Jinping announced their intention to increase the fiscal deficit target for next year. This is based on a report by China Central Television after the two-day huddle of the central economic work conference in Beijing.

The Politiburo pledged to ease monetary policy, including interest rates, "at an appropriate time." Expectations show that China may deliver the biggest rate cuts in a decade in 2025.

The announcements come as part of Beijing's efforts to address ongoing deflation and slowing economic growth. This marks a departure from the "prudent" monetary policy that has existed for 14 years.

The state media said that China will prioritise "lifting consumption vigorously" and other targets to promote overall domestic demand in 2025. Despite the meeting's generally upbeat tone, it fails to outline any concrete measures to increase consumption.

While the specifics of fiscal spending and borrowing will be revealed in March 2025, the direction is clear. This comes when China's economy faces several challenges, including its longest streak of deflation this century. This has put pressure on corporate profits and investment and added doubts about whether the country can achieve its 5 per cent growth target.

Exports are unlikely to continue being a key engine of development in the wake of Donald Trump's re-election. This raises the prospect of a fresh trade war with the United States. There are also increasing domestic difficulties. There has been no indication that the home market slump would soon end.

In response, politburo has committed to lifting domestic consumption as a top priority for 2025.