As China’s top lawmakers gather, what’s in store for the economy?
Focus of meeting expected to be on risk prevention and economic stabilisation rather than directly boosting demand
A meeting of China’s top legislative body starting on Monday is expected to unveil a financial policy package focused on stabilising the economy through local government debt swaps and injections of capital into banks, analysts said, rather than replicating the 4 trillion yuan stimulus of 2008 as hoped for by some market players.
They also noted that the outcome of Tuesday’s US presidential election, which is likely to become known during the five-day meeting, will play a crucial role in shaping the direction of China’s economic stimulus efforts.
While the market has been speculating about a multi-year package ranging in size from 2 trillion yuan (US$280.9 billion) to over 10 trillion yuan, economists have been tempering those expectations.
“It’s pretty clear to us that policymakers just want to put a floor under the economy, rather than reflate it in any meaningful way,” said Larry Hu, chief China economist at Macquarie Capital, predicting that the stimulus will be designed to meet this year’s gross domestic product growth target while mitigating tail risks.
The National People’s Congress (NPC) Standing Committee is convening in Beijing to discuss a wide range of issues, with a potential financial stimulus package being the one that has captured the most attention.
