The Chinese communist regime’s top economic planner, Zheng Shanjie, announced additional fiscal stimulus actions on October 8. These measures were in addition to last month’s surprise cash injection but fell short of the substantial package that the markets and some financial experts had anticipated. The announced measures included an advance of 100 billion yuan ($14.1 billion) from the 2025 central investment budget to be used this year and allowing construction projects valued at another 100 billion yuan in next year’s budget to start before the year-end. However, these measures were far below the level analysts had been calling for, which was a package between 2 trillion yuan ($283 billion) and 10 trillion yuan ($1.4 trillion).
The stock markets in Shanghai and Shenzhen reacted with disappointment to these measures. They initially opened high in anticipation but dropped during the press conference and settled at about 5 percent lower by the end of the day. Similarly, Hong Kong’s Hang Seng Index showed similar movements and ended at a decrease of 9 percent.
Before this policy announcement, China’s central bank authorities had already announced a significant stimulus package on September 24 to address liquidity, property, and stock markets. This package included reducing interest rates on existing mortgages, minimum downpayment amounts, and banks’ reserve requirement ratio. As a result of these policies, stock markets in Shanghai, Shenzhen, and Hong Kong experienced record gains between September 24th and October.
Despite these positive signs for China’s economy due to stock rallies after previous stimulus packages were announced by China’s central bank authorities earlier this year; most banks still expect China to miss its projected gross domestic product (GDP) growth rate of five percent for this year.
Exports remain one bright spot for China’s economy as they grew nearly nine percent YoY in August; however trade partners are increasingly pushing back against regular dumping due to overcapacity issues faced by Chinese industries.
Experts have differing opinions regarding how effective these stimulus packages will be for improving China’s economy trajectory as well as boosting investor confidence.