The Chinese government's measures aim to alleviate inflationary pressures and increase spending in a context of serious crisis affecting the country's real estate market. For analysts, however, it is still necessary to measure the size of the stimulus packages. Chinese Finance Minister Lan Fon during the China Development Forum in March 2024. Reuters reports that China has committed to “significantly increasing” its debt to revive the economy, but has left investors uncertain about the size overall debt package, an important detail for assessing the potential extent of the recent stock market rally. Finance Minister Lan Foan told reporters on Saturday that Beijing would help local governments resolve their debt problems, provide subsidies to low-income people, support the real estate market and recapitalize state-owned banks, among other things. , all these measures investor support in China is consistent with this. The world's second largest economy is struggling to overcome inflationary pressures and increase consumer confidence in a context of strong recession in the real estate market. Read also Argentine inflation stands at 3.5% in September and accumulates 209% in 12 months Miley declares Aerolíneas 'privatization issue' and intensifies dispute with unions 'Forgotten money': customers have until Wednesday to withdraw R$ 8.6 billions, but packages in the BC System The lack of data on the value of the dollar could prolong investors' nervous wait for a clear public policy roadmap until the next meeting of China's legislature, which approves debt issues. The date of the meeting has not yet been announced, but is scheduled for the next few weeks. Vasu Menon, managing director of investment strategy at OCBC in Singapore, said the press conference was “strong in resolve but lacking in numerical details”. “The large fiscal stimulus that investors expected to support the stock market recovery did not materialize,” Menon said, adding that it may have “frustrated some” in the market. A wide range of economic data in recent months has dashed expectations, raising concerns among economists and investors that the government's growth target of around 5% for this year is at risk and that a long-term structural recession is underway. Next week's September data is expected to show further weakness, but officials expressed “full confidence” that the 2024 target will be met. China's central bank announced measures to stimulate the economy Fiscal stimulus The new fiscal stimulus has been the subject of intense speculation in global financial markets after the leaders of the Communist Party's main Politburo signaled greater urgency in the economy at a meeting in September. Chinese stocks hit their highest mark in two years, rising 25% in the days following the meeting before retreating due to a lack of further policy details from authorities. Global raw materials markets for iron ore, industrial metals and oil have also been volatile, amid hopes that stimulus will boost weak Chinese demand. Reuters reported last month that China plans to issue about 2 trillion yuan ($284.43 billion) in special sovereign bonds this year as part of a new fiscal stimulus. Half of this amount will be used to help local governments resolve their debt problems, while the other half will subsidize the purchase of household appliances and other items, and will also provide a monthly subsidy of about 800 yuan, or $114, for each child. . Families with two or more children. Separately, Bloomberg News reported that China is also considering injecting up to 1 trillion yuan of capital into its largest state-owned banks, although analysts say the increased lending firepower will counter stubbornly weak demand for credit. Increased stimulus In late September, the central bank announced its most aggressive monetary support measures since the Covid-19 pandemic, including interest rate cuts, a 1 billion yuan liquidity injection and other measures to support real estate and stock markets. While the measures have boosted market confidence, analysts say Beijing needs to aggressively address deeper fundamental structural issues such as rising consumption and reducing dependence on debt-fueled infrastructure investment.
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