China poised to approve more help for ailing economy
BEIJING: China is expected to unveil a substantial support package for its struggling economy on Friday as officials conclude a key meeting, mindful of potential intensified trade tensions with US President-elect Donald Trump.
Economists predict Beijing will approve hundreds of billions of dollars in aid, focusing on indebted local governments and providing cash for banks to write off non-performing loans.
Policymakers monitored the US election as they gathered in the Chinese capital this week for a meeting of the country's top lawmaking body.
During his campaign, Trump promised punitive tariffs on Chinese goods, which could further strain the world's second-largest economy, already grappling with a prolonged housing crisis and sluggish consumption.
Observers suggest Beijing might cushion the impact with a long-awaited "bazooka stimulus" for the economy, though caution that details may take time.
The meeting, originally scheduled for late October, was likely postponed to allow "policymakers a chance to address a possible Trump win," said Lynn Song, chief economist for Greater China at ING.
"In our view, the odds for a larger policy support package will rise somewhat with a Trump victory," he added.
Trump's victory is "not necessarily bad for China as this may 'pressure' Beijing for a bigger stimulus," Qi Wang, CIO of UOB Kay Hian Wealth Management, said on X.
State media reported this week that officials had reviewed a bill to raise local government debt ceilings.
This move, touted last month, would allow authorities to borrow more to fund the acquisition of unused land for development, aiming to pull the property market out of a prolonged slump.
In September, Beijing began unveiling measures to boost economic activity, including rate cuts and easing some home purchasing restrictions, but analysts have lamented the lack of detail so far.
Trump's re-election necessitates greater urgency, experts say, though caution may still prevail as officials try to avoid increasing government debt.
"Any potential stimulus size may be bigger, but so is the pressure," Gary Ng, senior economist at Natixis, said.
"The market may still not get the economic boosters it wants," he warned.
China's Premier Li Qiang said this week he was "fully confident" the country would hit its growth target of around five percent for 2024, even after figures showed the economy experienced its slowest expansion in a year and a half during the third quarter.
In a rare bright spot, data on Thursday showed the nation's exports surged last month at their fastest pace in more than two years.
However, Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, warned, "we cannot rely on exports to carry China's economy." "I expect fiscal policy will become more proactive next year as a pillar for growth," he said.
By RSS/AFP
