We have seen the vigorous implementation of high-standard farmland construction and energy conservation and carbon reduction renovations in key areas, as well as the commencement of major projects such as urban sewage pipe network renovation, the Yangtze River High-Speed Railway, the rapid growth in sales of consumer goods like automobiles and home appliances, the upgrading and improvement of automation and intelligent transformation of enterprises and so on. In 2024, the "Two Major" (Implementation of Major National Strategies and Security Capability in Key Areas) and "Two New" policies (Large scale Equipment Renewal and Trade in of Consumer Goods) have been vigorously implemented in China, stimulating domestic demand potential and effectively driving economic growth. It is believed that the "Two Major" and "Two New" policies would play a greater role in comprehensively expanding domestic demand and supporting the sustainable and steady economic recovery and improvement in 2025.
"Two Major" Projects Boost Investment and Growth
At the end of the year of 2024 and the beginning of year of 2015, a batch of "two major" projects have speed up their commencement.
On December 31, 2024, the construction of the Yichang-Fuling section of the Shanghai-Chongqing-Chengdu High-Speed Railway along the Yangtze River began. It aims to create a new high-speed railway channel at speed of 350 kilometers per hour connecting the Sichuan-Chongqing region and the Central China region, which is of great significance for improving the comprehensive three-dimensional transportation corridor of the Yangtze River Economic Belt.
On January 3rd, the modern irrigation project of the Heishui River in the Zuojiang River Basin for drought control in Guangxi started construction. As one of the landmark major water conservancy projects under the "Two Major” Projects, it will further optimize the allocation of water resources in the upper reaches of the Yujiang River and effectively support the agricultural irrigation and village water supply conditions in Chongzuo City, Guangxi.
Yuan Da, the Deputy General Secretary of the National Development and Reform Commission, stated that the National Development and Reform Commission, in collaboration with relevant departments, has coordinated "hard investment" and "soft establishment", achieving a good start for the "Two Major" Projects since 2024.
It is proposed by the Government Work Report in 2024 that additional long term special treasury bond is planned to be issued for several consecutive years from that year on, which will be specifically used for the implementation of major national strategies and the construction of security capacity in key areas, covering 1 trillion yuan first in 2024. At the same time, China is also working together to promote "soft establishment" such as policy formulation, planning, and institutional reform in project construction, with equal emphasis on "hard investment" and "soft establishment".
Driven by the "Two Major" project construction, investment in key areas has maintained rapid growth, enhancing the long-term development momentum of the economy. Data shows that in the first 11 months of 2024, infrastructure investment increased by 4.2% year-on-year, with a growth rate of 0.9 higher than total investment. Guo Liyan, Deputy Director of the Economic Research Institute of the National Development and Reform Commission, said that in 2024, the solid promotion of the "Two Major" project" construction has achieved significant results. By stabilizing infrastructure investment and driving investment in new energy fields, it has effectively supported the annual economic growth and further promoted high-quality development.
The “Two New” Policies improve market demand.
The "Two New" policies have benefited the demands at both macro and micro levels.
From a macro perspective, driven by the policy of large-scale equipment updates, the potential demand continues to increase, and equipment procurement investment has achieved rapid growth. In the first 11 months of 2024, the investment in equipment and facilities procurement developed by 15.8% year-on-year, which is 12.5% higher than the total investment, contributing 65.3% of the overall investment growth, working as an important supporting factor for expanding investment.
Motivated by the policy of exchanging old for new consumer goods, the demand for upgrading green consumption continues to go up. In November 2024, the retail sales of sports and entertainment products increased by 3.5% year-on-year, while the retail sales of high-energy efficiency grades and smart home appliances in household appliances and audio-visual equipment maintained a growth of more than 10%. According to statistics from the Automobile Circulation Association, the retail sales of new energy passenger vehicles reached 1.268 million units in November, a year-on-year increase of 50.5%.
From a micro perspective, nearly 2.7 million cars have been applied for being written off up to 24:00 on December 19, 2024. Over 3.1 million new car have been exchanged nationwide. More than 33.3 million consumers purchased over 52.1 million home appliances for trade in products, over 53 million subsidized products for home decoration, kitchen and bathroom renovation, and over 1 million electric bicycles for trade in.
Fu Linghui, spokesperson for the National Bureau of Statistics, stated that the "Two Major" and "Two New" policies have effectively stimulated the production of related investment and consumer goods by pushing potential market demand, and promoted the manufacturing at the production end.
The implementation of the plan would be wider and deeper.
This year marks the end of the 14th Five-Year-Plan, and top-down organizational coordination and greater support would be given to the “Two Major” project policy in China. On the one hand, “Hard Investment” would be focused on the development of new quality productive forces, urban-rural integration, regional coordinated development, and high-quality population development so as to accelerate the implementation of major strategies and the construction of security capabilities in key areas. On the other hand, more efforts would be made on "Soft Establishment" effectively, insisting the combination of project construction and supporting reforms, accelerating the formulation of planning policies and innovation of institutional mechanisms, and improving the comprehensive efficiency of investment. Yuan Da stated that another batch of project lists are on the way in the near future to promote the formation of physical workload as soon as possible.
Attention have been paid to implement the "Two New" policies. By 2025, China will strive for updating equipment in the line of electronic information, safety production, facility agriculture and so on, to further improve the subsidy standards for the renewal of new energy city buses, power batteries, and obsolete agricultural machinery, to further simplify the approval process for equipment updates and promote the convenience of equipment updates for business entities.
In terms of exchanging old for new consumer goods, the support for the replacement of home decoration consumer goods would be greater, moreover, individual consumers may gain more benefits by purchasing more new digital products such as mobile phones, tablets, and smart watches and bracelets. Wang Wei, former Director of the Market Economy Research Institute of the Development Research Center of the State Council, believes that support for consumption should continue to be increased in a package of incremental policy tools, with a focus on increasing support for the trade in policy, expanding the coverage of subsidy product categories, improving the convenience of subsidy application, and carrying out trade in programs in more offline physical businesses and rural areas.