Investors and analysts are expecting China to deploy as much as $283 billion (2 trillion yuan) in fresh fiscal stimulus as Beijing seeks to shore up the world’s No. 2 economy and boost confidence.
That’s what they’re hoping the country’s finance minister will announce at a highly anticipated briefing on Saturday, according to a majority of 23 market participants surveyed by Bloomberg.
Beyond the amount of any fiscal package, the target of support will indicate where the government looks to steer its economy after years of debt-fuelled expansion through investment, particularly in real estate and infrastructure, Bloomberg reported.
“The stimulus should be multi-year and targeted to households and not restarting the real estate investment-led growth story,” said Pushan Dutt, professor of economics at INSEAD. “It is the focus of the stimulus rather than the size that is important,” Dutt said.
The weekend press conference, which the government said would introduce measures to strengthen fiscal policy, comes as investors assess how far the authorities plan to go with stimulus efforts that prompted a world-beating stock rally.
China has already cut interest rates and ramped up support for property and stock markets in a barrage of steps announced in late September.
But investors have clamoured for fiscal interventions economists believe are crucial to lifting confidence.
Onshore Chinese shares remained volatile throughout the week after ending a 10-day rally on Wednesday, as officials disappointed by announcing no major new stimulus following a weeklong holiday.
“Government agencies are now expected to feel the pulse of the market before publishing policies,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc.
“They should avoid letting expectations climb and crash to deal a blow to market sentiment.”
Most of the respondents, including economists, strategists and fund managers, expect new fiscal stimulus in the next six months if Finance Minister Lan Fo’an doesn’t announce it Saturday.
They forecast China will sell more government debt to expand public spending through the end of next year, with special bonds being the most likely option. Four respondents anticipate a package exceeding 3 trillion yuan.
A portion of the stimulus is expected to target consumption, which has been a weak spot in China’s post-pandemic recovery.
Boosting consumption would help rebalance the economy and reduce its reliance on exports to drive growth amid rising trade tensions, although Beijing has refrained from direct handouts on a massive scale due to concerns over what it calls “welfarism.”
China typically relied on infrastructure investment to lift the economy out of past downturns. But a saturation of infrastructure after decades of urbanization means throwing money at the sector may be less effective in spurring growth this time around.