China pledges more stimulus to hit growth target
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The news: Chinese leaders pledged “necessary fiscal spending” to meet the country’s 5% growth target, raising expectations for fresh stimulus on top of recent measures.
The context: The 24-member Politburo vowed to stabilise the property sector and support fiscal spending to counter the slowdown in the world’s second-largest economy.
Authorities also promised “strong” interest rate cuts, targeted aid for low-income groups and increased bond issuances for investment.
Coming just two days after the central bank unveiled its surprise stimulus package, the Politburo’s statement is seen as a shift toward a more coordinated and aggressive stimulus strategy to prevent further economic decline.
The numbers: The Politburo statement did not provide details, but Reuters, citing two unnamed sources, reported plans for a 2 trillion yuan ($410 billion) special sovereign bond issue to boost consumption and address local government debt.
Meanwhile, sources told Bloomberg China may inject up to 1 trillion yuan into its major state banks to bolster economic support, primarily by issuing new special sovereign bonds.
The CSI 300 Index of onshore stocks surged 4.23% following the announcements.
The sources: Politburo statement , Bloomberg , Reuters
