On October 12, 2024, China's Minister of Finance, Lan Fo'an announced a stimulus plan that will be carried out on a large scale by the Chinese government.
This action was taken to stimulate China's slow economic growth after a meeting in September held by the top leadership of the Communist Party, the Politburo.
This plan includes an increase in government debt issuance of 2.3 trillion yuan (around RM 1.403 trillion) in the form of 'special bonds' for the next three months.
The plan is considered the biggest effort since the global financial crisis in 2007-2008.
Lan stated that these measures were made to help the government and people with low incomes, as well as support the real estate market and the capital of national banks.
In addition, the debt limit for the government will be reduced, allowing more funds to be released for infrastructure projects and job protection.
China is currently facing strong deflationary pressures, with a declining real estate market and weak consumer confidence in their national economy.
Much of the economic data has failed to meet forecasts, raising concerns that the growth target of around 5% for this year may be difficult.
This stimulus plan has been planned as a follow-up action after the efforts to cut interest rates and inject liquidity into banks were announced recently.
Huang Xuefeng, Director of Credit Research at Shanghai Anfang Private Fund Co commented that the focus of the plan is more focused on financing the fiscal gap and resolving local government debt risk.
However, Huang pointed out that without measures focused on stimulating demand and investment, it will be difficult to reduce deflationary pressures.
