Next year’s budget includes KRW 19 trillion invested within the year.
Authorities show confidence in ‘5% growth’
“Investor disappointment… “It looks like they will introduce additional stimulus measures.”
The Chinese government announced on the 8th an economic stimulus plan worth a total of 38 trillion won, including an early injection of 100 billion yuan (about 19 trillion won) from next year’s budget by the end of this year. An additional economic stimulus package was introduced following the large-scale monetary easing policy announced on the 24th of last month, but it fell far short of expectations that the amount of fiscal injection would reach up to trillions of yuan. First of all, there is an assessment that the Chinese government is taking a breather while watching the market situation. In addition, many predict that this measure will have difficulty bringing about a rebound in China‘s domestic market, which has been suffering from a long economic recession.
Zheng Sanjie (鄭柵潔), director (minister) of China’s National Development and Reform Commission, held a press conference on this day and said, “We will soon invest the 100 billion yuan allocated in next year’s central budget first, and establish a list of core construction projects worth 100 billion yuan.” “We will announce this so that local governments can prepare in advance,” he said. He also added, “The 1 trillion yuan of ultra-long-term special government bonds issued this year have already been delivered to local governments, and we will continue to issue ultra-long-term special bonds next year.”
In addition, the Chinese government has decided to increase student loan limits for college students, reduce interest rates, and expand services related to seniors and childcare to stimulate domestic demand. He also said that he would help businesses by extending various tax incentives scheduled to expire at the end of this year.
Chinese authorities also expressed confidence in achieving the target of ‘5% growth rate of gross domestic product (GDP)’. Deputy Director Zhao Tianxin said, “In the first three quarters (January to September) of this year, the Chinese economy still maintains a stable development trend,” and “there are conditions and capabilities to achieve the expected economic development goals.” .
However, Bloomberg News commented on this economic stimulus measure, saying, “Advancing next year’s fiscal spending is not enough to induce a rapid (economic) rebound.” Reuters also predicted, “As this measure has disappointed investors, China will come up with additional plans to expand its finances.” China’s Shanghai Composite Index started with a surge of about 10% on the 8th, the first trading day after the National Day holiday (1st to 7th) due to expectations of additional economic stimulus measures. However, when the Chinese government announced a weak economic stimulus package, the increase decreased significantly and ended the day with a 4.59% increase compared to the previous trading day. The Hong Kong stock market also plunged 7% amid concerns about overvaluation of some stocks.
Beijing = Correspondent Kim Cheol-joong [email protected]
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