Explainer | Will China’s top legislature give the green light to fiscal stimulus package?

As China’s top legislative body prepares to convene, we look at the likelihood of a fiscal stimulus and the process needed to approve it

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A fiscal stimulus package, if approved by China’s top legislature, would be likely to spur activity and drive demand. Photo: AFP

Published: 7:00pm, 3 Nov 2024Updated: 4:22pm, 4 Nov 2024

China’s top legislative body, the National People’s Congress (NPC) Standing Committee, will convene in Beijing on Monday to discuss a wide range of issues. A large fiscal stimulus, recommended by several prominent economists and hotly anticipated by investors, is likely to be among them.

As markets speculate over the potential size of a fiscal package – with estimates ranging from 2 trillion yuan (US$280.66 billion) to as high as 10 trillion yuan – we have compiled some basic facts about the coming session, how they would approve such a stimulus and when the public is likely to find out about it.

How are the legislature and stimulus related?

China’s financial ministry under the State Council – the country’s cabinet – typically submits the fiscal budget to the NPC for approval during the annual legislative session in March, a necessary step before implementation.

The NPC Standing Committee, which exercises legislative authority outside the full session, is empowered to approve any adjustments to government budgets within the financial year – including changes to the annual fiscal deficit ratio, the quota for special treasury bonds, and the ceiling for local government debt levels.

It traditionally convenes every two months, often at the end of even-numbered months. There have been exceptions to this informal custom; the coming conclave will ring in November, and a previous meeting this year was held in mid-September.

The agenda for the November meeting did not include bills related to the financial ministry or budget plans. However, this does not mean it cannot happen: on several occasions, budgetary adjustments have been announced after the fact.

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