China has announced a series of measures to support its economy, but stopped short of unveiling a major spending package. The National Development and Reform Commission (NDRC) outlined plans to frontload 100 billion yuan ($14.1 billion) in spending from the government’s 2025 budget and an additional 100 billion yuan for construction projects. However, the scale of the spending fell below the multi-trillion yuan levels that analysts had anticipated.
NDRC Chairman Zheng Shanjie stated that China is still on track to achieve its full-year economic growth target of around 5%, despite acknowledging the challenges posed by an increasingly complex global environment. Investors, who were hoping for bolder moves, appeared disappointed by the piecemeal nature of the announced plans. As a result, Shanghai’s benchmark index, which initially gained 10% as markets reopened after a weeklong holiday, traded just 3% higher.
China’s leaders have been grappling with the task of reviving growth since the end of the COVID-19 pandemic.
measures to support economic growth
The challenges have been compounded by a downturn in the property market, sluggish consumer spending, and slowing global demand.
UBS chief China economist Tao Wang noted that the market was likely expecting a significant fiscal stimulus. She suggested that a modest package of 1.5 to 2 trillion yuan ($210 billion to $280 billion) is more reasonable to expect in the near term, with an additional 2 to 3 trillion yuan ($280 billion to $420 billion) in 2025. The NDRC stated that the new measures would focus on boosting investment and spending, as well as supporting small and medium-sized businesses that operate at a disadvantage compared to large state-owned corporations.
Zheng also mentioned that comprehensive policy measures would be introduced to help stop the decline in the real estate market. Despite the lack of a major stimulus announcement, officials maintained their optimism, pledging subsidies for recent graduates struggling to find jobs and announcing rare cash handouts to disadvantaged citizens. The ruling Communist Party’s Politburo also vowed to boost fiscal spending, arrest the decline of the property market, and improve employment for fresh graduates and migrant workers.
