Zheng Shanjie, Chairman of China’s National Development and Reform Commission (NDRC), outlined a series of actions to support China's economy at a much-anticipated press conference on Tuesday.
However, he stopped short of announcing any major new stimulus measures, dampening investor enthusiasm and weakening a rally in mainland Chinese markets.
Among the measures announced, China plans to accelerate special-purpose bond issuance to local governments, aimed at promoting regional economic growth.
Zheng noted that the issuance of 1 trillion yuan in ultra-long special sovereign bonds has already been fully allocated to fund local projects, and the country will continue issuing such bonds next year. Additionally, a 100 billion yuan investment plan for 2024 will be unveiled by the end of October, ahead of schedule.
While Zheng promised further measures to support the property market and boost domestic spending, there were no significant new stimulus initiatives, disappointing markets. Mainland Chinese stocks surged over 10% in early trading before paring gains following the press conference.
Economic Context and Market Reaction
The announcement comes as China returns from the Golden Week holiday, during which mainland Chinese markets saw significant gains.
Chinese authorities had previously hinted at the need for stronger fiscal and monetary support, particularly in light of the country’s slowing economic recovery. China's GDP grew by 5% in the first half of the year, but second-quarter growth fell short of expectations at 4.7%, its slowest pace since early 2023.
Despite the measures aimed at stabilising the economy, concerns remain, particularly in the property sector. Recent data highlights ongoing challenges, with China’s consumer price index rising just 0.6% year-on-year in August, and factory activity contracting for the fifth consecutive month in September.
Zheng acknowledged the difficulties in meeting China’s growth targets, stating that more coordinated macroeconomic policies will be needed to address these challenges.