On March 19, Peking University’s Guanghua School of Management (Guanghua) and Institute of Economic Policy Research (IEPR) jointly organized the 2025 PKU Guanghua Economic Outlook and Policy Analysis Conference After the Two Sessions at Peking University Science Park. This conference brought together 10 Guanghua professors who shared their insights on what new policies and strategies raised during the recent Two Sessions meant for China’s development, and how China can overcome persisting challenges to sustain further economic growth.  

The conference opened with discussions on macroeconomics and policy coordination, featuring insights from Dean LIU Qiao of Guanghua School of Management on unlocking growth potential and fostering economic stability. He highlighted that initial pessimism about China’s economic outlook, driven by structural challenges, has shifted following the rise of DeepSeek and Ne Zha 2 – both of which demonstrated China’s strength in innovation and untapped domestic consumption potential.

This year’s Two Sessions emphasized boosting domestic consumption, which, according to Dean Liu, requires strengthening residents’ purchasing power. He stressed the importance of policy reforms beyond fiscal measures, advocating for higher birth rates and enhanced social welfare protection to encourage both the ability and willingness to spend.

Beyond consumption, total factor productivity (TFP) is key to China’s long-term growth. China- U.S. economic competition now largely centers on TFP, where China holds an advantage due to its capacity for large-scale industrial applications. However, Dean Liu pointed out that greater control over upstream industries would further enhance productivity. Additionally, technological advancements and resource allocation efficiency improvements remain critical drivers of growth.

Looking ahead to 2025 and the transition to the 15th Five-Year Plan, Dean Liu acknowledged ongoing challenges like weak real estate growth, but noted that their risks have become more predictable. With China shifting from an investment-driven model to one balancing investment and consumption, he remains optimistic about achieving sustainable economic growth.

Professor YAN Se then touched on uncertainties in market growth, focusing on China’s short-term macroeconomic scene. He noted that although the first two months of 2025 saw steady macroeconomic growth, there were clear disparities between growth in emerging and traditional sectors. The real estate sector remained sluggish, and consumer demand was also still below expectations, indicating room for further improvement. Therefore, Yan emphasized the need for stronger domestic policy support to sustain future growth, which should come in the form of enhancing macro-policy innovation and improving implementation efficiency.

In the real estate sector, refining the management of existing stock assets was highlighted as a priority. Yan affirmed improvements in first-and second-tier cities, but he noted that third-tier cities still faced high levels of stock assets that took longer to clear. He proposed the importance of incentivizing regional governmental organizations to better manage stock assets.

Additionally, expanding trade-in subsidies to service sectors like catering and tourism could help stimulate domestic demand. While China has already established a decent scale of trade-in services for household appliances, service industries allow for repetitive consumption within shorter time spans, hence promoting better growth.

Yan also reiterated the importance of increasing fertility subsidies to address demographic challenges. Beyond these sector-specific measures, the timely execution of fiscal policies was deemed crucial to maintaining economic stability, while monetary policies should focus on lowering real interest rates and reducing financing costs to invigorate market activity.

In essence, Yan underscored that a well-coordinated policy mix—spanning fiscal, monetary, and sector-specific measures—is crucial in driving sustained and balanced economic growth throughout 2025.

Professor TANG Yao explored the evolving role of international engagement in China’s development strategy, emphasizing the need for high-quality international engagement to sustain long-term growth. Setting the backdrop for this viewpoint, President Xi Jinping's "dual circulation" framework prioritizes domestic economic resilience while reinforcing that international integration, expanding independent and unilateral opening has become a core policy directive. The 2025 Government Work Report also underscores the importance of optimizing trade and investment policies to enhance China’s global economic participation.

Tang stressed the importance of adapting China’s opening-up model to a shifting global landscape, particularly through optimizing both "ins" (imports and inbound investment) and "outs" (exports and outbound investment). On the inbound side, China should diversify its market offerings by attracting foreign enterprises, especially those involved in the service industry that can boost China’s consumption. On the outbound side, China is leveraging its industrial strengths to export value creation, encouraging intermediate goods trade, supporting enterprises in establishing long-term global investments, and expanding financial services to facilitate international industry development.

Tang’s discussion concluded with an emphasis on expanding shared global interests through strategic economic partnerships. By refining its approach to international trade and investment, China seeks to foster mutual growth with global partners, ensuring that economic engagement remains both inclusive and sustainable in the years ahead.

The discussion then shifted to structural transformation and livelihood security, with Professor CHEN Yuyu launching this segment with his presentation on Consumption Issues in Short-Term Economic Stability and Long-Term Growth

Over the past three years, China has faced short-term economic pressures, including the pandemic, real estate adjustments, local debt concerns, and global uncertainties. Meanwhile, long-term challenges persist, particularly the slow growth in total factor productivity. Since mid-2024, policy measures have helped stabilize the economy, but achieving sustainable growth requires deeper structural reforms.

A key issue is China’s heavily unbalanced reliance on the manufacturing industry, which resulted in the neglection of weak household consumption. In 2024, net exports contributed 30% to GDP growth—an unstable foundation given global uncertainties—while household consumption remained low at 42% of GDP. While Chen didn’t deny that the manufacturing industry plays an important role, he noted that China does not need an economy where manufacturing constitutes the majority of its GDP.

In response, Chen outlined several key reforms, including increasing household consumption through policy adjustments, improving the business environment to support service sector growth, reforming state-owned enterprises (SOEs) to improve capital allocation, expanding social security, and promoting urbanization and job creation. While recent policies signal awareness of these issues, Chen posits that China must seize this opportunity to implement long-term structural reforms that drive sustainable and balanced growth.

Exploring the relationship between household income and consumption growth, Professor GONG Liutang delivered his piece on the importance of boosting residential property income. During the Two Sessions this year, the Chinese government introduced an Action Plan for Boosting Consumption, which aims to increase household income, particularly among low- and middle-income groups.

From Gong’s perspective, it is China’s poor domestic consumption that accentuated high reliance on exports. The key issue behind poor consumption then lies with the slow expansion of property income, which accounts for only 8.31% of total household income—a figure significantly lower than that of developed economies. To address this, Gong underscored structural challenges that hinder intended growth, including the limited sources of property income, heavy reliance on interest earnings, and persistent urban-rural disparities. These factors weaken disposable income growth, restrict consumption capacity, and exacerbate income inequality.

In response to these issues, Gong proposed several policy measures that could mediate the situation. These include accelerating rural land reform to improve property income in rural areas, enhancing capital markets by regulating dividend mechanisms and encouraging corporate payouts, facilitating interregional factor mobility to reduce income disparities, improving financial literacy to help households maximize investment returns, and finally strengthening statistical monitoring to support data-driven policymaking.

By increasing household property income through targeted reforms, it is believed that China can lay a stronger foundation for consumption growth, ultimately driving long-term economic stability and high-quality development.

On the topic of income and consumption, Professor QIU Xincheng gave the next presentation on China’s labor market. While China's labor market remains broadly stable in 2024, the workforce is still prone to challenges and difficulties given current trends within the society.

Qiu zoomed in on the unfavorable employment rates amongst youths aged16-24. Given the trends in population ageing and the change in workforce demographics, youths now play a larger role in supporting the workforce economy. While this trend is seen globally, youths in China are still subjected to high employment pressure. Concurrently, the ageing population also gives rise to new challenges and opportunities at the same time. Although the old-age dependency ratio is steadily increasing, Qiu believed that it is timely for China to delay retirement age since China has reached a point where the demographic dividend is declining, and intergenerational growth rate of human capital is slowing. The development of “silver economy” has become a strategic priority, and should focus on restructuring norms and sentiments in the workforce to create an inclusive labor force.

That aside, Qiu emphasized the need to strengthen social security protection for workers of non-traditional employment, which has been limited and could lead to serious consequences after more self-employed workers emerge. Qiu concluded that workforce should be active in incorporating AI as a supporting tool for workers, reducing its threat to employment, and instead boosting production and productivity.

Concluding this segment, Professor ZHOU Li’an presented on village economy and rural CEOs. He commented on the emerging "Rural CEO" initiative, which has been actively implemented in provincial-level regions such as Zhejiang, Guangdong, Yunnan, Chongqing, and Anhui. By recruiting professional management talent through market-oriented channels, grassroots governments can better attend to rural operations, yielding promising economic results and increasing communal wealth. Zhou affirmed the role of “Rural CEOs” as the manager of various government project funds, diversified village resources, and third-party social capital.

However, Zhou still anticipated further efforts in scaling and institutionalizing this model. Firstly, national-level policies should be introduced to standardize the selection, training, and evaluation of Rural CEOs. Secondly, village governance should integrate economic development, with performance assessments of village leaders reflecting both administrative and business responsibilities. Lastly, rural revitalization efforts should shift towards human capital investment, ensuring that talent development complements physical infrastructure projects, ultimately enhancing rural economic sustainability.

The last segment of the conference looked further into financial reforms and innovation. As an expert in the field of real estate, Professor ZHANG Zheng shared his inputs on developments in the real estate market and Real Estate Investment Trusts (REITs).

Zhang affirmed that since the government’s directive to stabilize real estate market in September 2024, signs of recovery have emerged, but he also noted that underlying challenges persist. The root of these problems can be divided into cyclical factors—such as slowing income growth and demographic shifts—and structural issues, including mismatched financing and interconnected financial risks.

While recent policies have eased short-term pressures, long-term structural issues require systemic reforms and more comprehensive measures. Zhang proposed five channels to revitalize existing real estate assets, including aligning asset acquisitions with market demand, establishing national or regional real estate investment funds, expanding revitalization efforts to commercial properties, promoting long-term rental and senior housing, and developing a multi-tiered REITs market to inject new liquidity into the sector.

At this year’s Two Sessions, policymakers outlined a bold vision for capital market reform aimed at fostering technological innovation and ensuring that all investors benefit from economic growth.

Based on this vision, Professor LIU Xiaolei analyzed how capital market reforms can support technological innovation and ensure inclusive economic growth. The discussion emphasized the need for financial markets to provide long-term funding for high-risk tech enterprises while ensuring that all investors—and not just a selected few—benefit from market gains.

According to Liu Xiaolei, capital markets must actively channel investment into emerging industries like AI and semiconductors. Drawing from international examples, she noted that high-tech stock valuations in the U.S. have spurred both market growth and venture investment, a strategy China could adopt through valuation adjustments and policy incentives. Additionally, ensuring that ordinary investors fairly share in market gains requires a rational valuation framework that prevents speculation while encouraging steady growth.

To achieve these goals, she proposed several key reforms. Encouraging long-term capital inflows—particularly pension and insurance funds—would enhance market stability. Allowing controlled bank capital participation through liquidity-enhancing tools could strengthen financial reserves and support tech startups. She also emphasized the importance of investor confidence, advocating for dividends, stock buybacks, transparency improvements, and lower fund fees. Faster IPO approvals and expanded M&A options would create a more efficient and accessible capital market.

In conclusion, Liu Xiaolei highlighted that these reforms aim to balance innovation-driven growth with regulatory oversight, ensuring that China’s capital markets remain a key driver of economic development and shared prosperity.

Professor LI Bo examined the evolving government-guided funds, highlighting the shift from large-scale capital deployment to more targeted investments aimed at fostering unicorn enterprises. As global industrial competition shifts toward securing technological leadership, China has prioritized funding hard-tech sectors such as semiconductors, AI, and biotech. However, challenges remain in optimizing resource allocation, avoiding redundant investments, and bridging financing gaps for early-stage ventures.

A key discussion point raised by Li was the need for strategic investment focus. While government funds have successfully directed capital into high-potential industries, excessive concentration in similar sectors across provinces risks inefficiency. Additionally, cross-regional synergy plays a crucial role in maximizing investment impact. A structured “R&D–Conversion–Industrialization” model has emerged, but declining differentiation in investment priorities may weaken overall innovation efficiency.

Li also emphasized the importance of enhancing the innovation ecosystem to amplify the effectiveness of public funding. Case studies from Shenzhen and Shanghai demonstrated how well-designed business environments, tax incentives, and streamlined regulations attract top-tier investors and unlock private capital. A stronger institutional framework is essential to ensure that government-guided funds catalyze—rather than replace—market-driven innovation.

To improve the effectiveness of government-guided funds, Li highlighted four key strategies: precision investment tailored to regional strengths, ecosystem development through policy support and industrial synergies, cross-regional collaboration to prevent redundant investments, and institutional innovation to ensure long-term funding efficiency. By integrating these approaches, government-guided funds could evolve from financial instruments into strategic enablers of China’s next wave of high-quality industrial growth.

Since 2014, Guanghua has consistently held economic outlook and policy analysis conferences during the period of the Two Sessions. As we enter the second decade of this tradition, we remain committed to staying abreast of new policy and economic developments while continuing to provide a platform for in-depth discussions, data-driven insights, and forward-looking perspectives on key policy and market trends. We hope these exchanges will foster a deeper understanding of China’s economic trajectory in an increasingly complex global environment as we navigate a new era.