China’s government has announced a highly anticipated press conference on fiscal policy, set to take place this Saturday, in an effort to reassure investors and stimulate the world’s second-largest economy. The briefing, led by Finance Minister Lan Fo’an, will outline measures to bolster growth and address concerns from the media.
The announcement comes on the heels of a lackluster stimulus package unveiled by the National Development and Reform Commission, which failed to impress markets. As a result, investors have been eagerly awaiting a more substantial fiscal response to arrest the country’s slowing economic growth.
According to experts, the Ministry of Finance is expected to play a crucial role in issuing bonds to support stimulus measures, which will be essential in implementing projects announced by the NDRC and making monetary easing effective. Banks such as Morgan Stanley, HSBC, and Citigroup are predicting stimulus packages worth between 2 trillion and 3 trillion yuan ($283 billion to $424 billion).
Possible measures being considered include support for local government financing, infrastructure investment, consumption boosts, and bank recapitalization. The government has acknowledged the concerns of the private sector and investors, with Premier Li Qiang vowing to “listen to the voice of the market” when formulating economic policies.
In recent weeks, China has taken several steps to stabilize growth, including interest rate cuts, increased liquidity, and a pledge of up to $340 billion to support the stock market. These efforts have contributed to a 30% surge in Chinese stocks. The central bank has also announced plans to diversify its monetary policy toolbox and increase sovereign bond trading in the open market.
As China’s economy continues to slow, the government is under pressure to take bold action to meet its 2024 growth target of around 5%. With the spotlight on Saturday’s briefing, investors will be watching closely for signs of a more substantial fiscal response to shore up confidence and drive growth.
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