China will ‘significantly’ increase spending to revive economic growth

China’s Finance Minister Lan Foan speaks at the National People’s Congress in Beijing, China, on March 6, 2024.
Published October 12, 2024


China will “significantly increase” government debt issuance to offer subsidies to people with low incomes, support the property market and replenish state banks’ capital as it pushes to revive sputtering economic growth.

Without providing details on the size of the fiscal stimulus being prepared, Finance Minister Lan Foan told a news conference on Saturday there will be more “counter-cyclical measures” this year.

“There is still relatively big room for China to issue debt,” he said.

The world’s second-largest economy faces strong deflationary pressures due to a sharp property market downturn and frail consumer confidence, which have exposed its over-reliance on exports in an increasingly tense global trade environment.

A wide range of economic data in recent months has missed forecasts, raising concerns among economists and investors that the government’s roughly 5% growth target this year was at risk and that a longer-term structural slowdown could be in play.

Data for September, which will be released over the coming week, is expected to show further weakness, but Zheng Shanjie, the chairman of the National Development and Reform Commission (NDRC), China’s state planner, said he was “fully confident” that the target will be met.

Fiscal stimulus measures in China have been the subject of intense speculation in global financial markets after a September meeting of the Communist Party’s top leaders, the Politburo, signaled an increased sense of urgency about mounting economic headwinds.

 

READ FULL ARTICLE

SOURCE: www.cnn.com

RELATED: China flags more fiscal stimulus for economy, leaves out key details on size


Beijing, July 14, 2024. REUTERS/Tingshu Wang Purchase Licensing Rights
Published October 12, 2024

BEIJING, Oct 12 (Reuters) – China pledged on Saturday to “significantly increase” debt to revive its sputtering economy, but left investors guessing on the overall size of the stimulus package, a vital detail to gauge the longevity of its recent stock market rally.

Finance Minister Lan Foan told a press conference Beijing will help local governments tackle their debt problems, offer subsidies to people with low incomes, support the property market and replenish state banks’ capital, among other measures.

These are all steps investors have been urging China to take as the world’s second-largest economy loses momentum and struggles to overcome deflationary pressures and lift consumer confidence amid a sharp property market downturn.

But Lan’s omission of a dollar figure for the package is likely to prolong investors’ nervous wait for a clearer policy roadmap until the next meeting of China’s rubber-stamp legislature, which approves extra debt issuance. A date for the meeting has yet to be announced but it is expected in coming weeks.

 

READ FULL ARTICLE

SOURCE: www.reuters.com