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The
piecemeal nature of the plans announced Tuesday appeared to
disappoint investors who were hoping for bolder moves, and
Shanghai's benchmark gave up a 10% initial gain as markets
reopened after a weeklong holiday to trade just 3% higher.
The head of the National Development and Reform Commission said
the government will frontload 100 billion yuan ($14.1 billion)
in spending from the government’s budget for 2025 in addition to
another 100 billion yuan for construction projects.
The scale of spending overall was well below the multi-trillion
yuan levels that analysts said might be expected.
The NDRC’s chairman, Zheng Shanjie, said China was still on
track to attain its full-year economic growth target of around
5%. But he acknowledged the economy faces difficulties and an
increasingly “more complex and extreme” global environment.
China's leaders have been struggling to rev up growth since the
COVID-19 pandemic ended. A downturn in the property market has
deepened that challenge, as consumer spending has lagged and
global demand also has slowed.
In a note, UBS chief China economist Tao Wang said that the
market was “likely expecting a significant fiscal stimulus.”
A modest package of 1.5 to 2 trillion yuan ($210 billion to $280
billion) is more reasonable to expect in the near-term, she
said, with another 2 to 3 trillion yuan ($280 billion to $420
billion) in 2025.
In September, China unveiled a monetary stimulus package
including cuts to mortgage rates and in the amount of reserves
are required to keep on deposit with the central bank. Those and
other measures were the most aggressive efforts so far to try to
pull the property industry out of the doldrums and spur faster
growth.
On Tuesday, the NDRC said that new measures would focus on
boosting investment and spending and supporting small and
medium-sized businesses that operate at a disadvantage to large,
state-corporations.
But much of the information focused on technical issues such as
payment regulations, management of projects and deployment of
bonds for financing.
To counter falling housing sales and home prices, Zheng said
there would be “comprehensive policy measures to help stop the
decline in the real estate market.”
“In response to volatility and declines in the stock market, we
will introduce a series of powerful and effective measures to
strive to boost the capital market,” he said, without giving
details.
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