Chinese Finance Minister Lan Fo’an. File | Photo credit: AP
“The Chinese government is exploring additional ways to boost the economy,” Finance Minister Lan Fo’an said on Saturday (Oct 12, 2024), but he only unveiled a major new stimulus plan that analysts and stock investors were hoping for. .
Mr Lan’s comments left the door open for such a plan in the future, but he did not reveal what was being considered. “There are other policy instruments being discussed that are still in the pipeline,” he said at a news conference, adding that there is “sufficient room” in the government budget to increase debt and widen the deficit.
China’s economy has remained sluggish despite the lifting of COVID-19 restrictions in late 2022. Companies have cut back on hiring and wages, and a prolonged downturn in the real estate market has dented consumer confidence, curbing spending.
The government has increased pensions and offered subsidies to people who trade in old cars or appliances for new ones, but such steps have failed to stem economic growth.
China’s stock markets rallied after the central bank and other government agencies announced steps in late September to revive the real estate sector and support financial markets.
But the rally has since cooled amid concerns over whether these steps were enough to achieve a sustainable economic recovery. Investors hoped Lan would announce a stimulus package of up to 2 trillion yuan ($280 million).
The finance minister instead said the government would roll out a package of additional measures to accelerate the implementation of its existing policies.
These include increasing scholarships for students, issuing bonds to help big banks replenish their capital and providing more support to highly indebted local governments, some of which have had to cut public services.
Published – Oct 12, 2024 11:36 AM IST
