Bankinter: The Development and Reform Commission has announced a new fiscal stimulus package of CNY 200 billion (approx. $28 billion) to ensure that growth reaches the 5% target. The measures will be structured in two tranches. In the first, CNY 100bn ultra-long bonds will be issued to develop as yet unspecified projects, and in the second, the same amount will be earmarked for a series of strategic investments, of which no details are provided.
Analysis team’s view: The market was expecting a stronger announcement in terms of both amount and design. China mobilises a very small amount of funds (approx. 0.2% of GDP) which, moreover, it anticipates from the 2025 budget. Therefore, it does not represent an aggregate increase in resources, but simply the anticipation of those already expected for the coming year. This announcement comes on top of the monetary stimuli announced at the end of September (cut in the reserve ratio, lowering of interest rates, etc.), the size and effectiveness of which is also debatable (similar amount in relative terms, 0.2% of GDP). Our view on China remains unchanged and continues to be negative. We consider the measures insufficient to stimulate an economy affected by a severe real estate crisis, a very depressed level of domestic consumption and strong geopolitical tensions that threaten its exports to key regions (the US and Europe).
