China’s National Development and Reform Commission (NDRC) Chairman, Zheng Shanjie, recently announced a series of measures to boost the country’s economy. However, the lack of new major stimulus plans disappointed investors, leading to a weakening of the mainland Chinese markets.
One of the actions proposed by Zheng is the acceleration of special purpose bond issuance to local governments to support regional economic growth. Additionally, he mentioned the deployment of ultra-long special sovereign bonds totaling 1 trillion yuan to fund local projects, with plans to continue issuing such bonds next year.
Moreover, the central government is set to release a 100 billion yuan investment plan for the upcoming year ahead of schedule. Despite these announcements, the rally in Chinese markets lost momentum as policymakers refrained from implementing further stimulus measures.
Economist Yue Su from the Economist Intelligence Unit noted that the absence of specific figures may not necessarily be a negative sign, as China’s pro-growth policy stance remains unchanged. She maintained her growth forecast for China at 4.7% for this year and 4.8% for 2025, while anticipating additional fiscal support from Beijing to stimulate the real economy.
Shaun Rein, partner and managing director at China Market Research Group, highlighted that many Western investors were expecting a massive stimulus from the government. Without concrete details on fiscal stimulus, the market rally could fade.
Looking back, China’s top leaders had expressed urgency in addressing the economic downturn, aiming to achieve an annual growth target of around 5%. Prior to the recent holiday, authorities called for strengthening fiscal and monetary policy support to counteract the sliding property prices.
The stimulus efforts come as China’s economy faced challenges from lackluster domestic demand and a prolonged property downturn. Economic data showed a slower growth rate in the first half of the year, with the GDP growing by 5.0% year on year. However, the April-June quarter saw a growth of 4.7%, the slowest since 2023.
Recent reports also indicated a rise in China’s consumer price index by 0.6% year on year in August, below expectations. Factory activity contracted for the fifth consecutive month in September, with the official PMI at 49.8, signaling a decline in economic activity.
As China continues to navigate through economic challenges, the NDRC chief emphasized the need to strengthen macroeconomic policies to achieve growth targets. Despite existing difficulties, the government remains committed to supporting economic recovery and growth.
