The Chinese economy is on the move to rise again, after consistent 'weak recovery' predictions from experts, with newly-shared plans from the National Development and Reform Commission.
However, investors were left disappointed after China missed out on adding new stimulus measures.
According to CNBC, it caused a negative reaction in the Chinese stock market. Regardless, Zheng Shanjie, chairman of NDRC, stated that they will expedite their support for regional economic growth. This includes special-purpose bonds for local governments worth 1 trillion yuan ($137 billion). For next year, the central government will also release 100 billion yuan ($13.7 billion), which will be released by the end of this month ahead of schedule to lock in their long-term plans.
China's Decision on Stimulus Measures
Despite promising plans to recover the Chinese economy, the lack of stimulus caused investors to slow down with their investments. CNN reported that the Shanghai Composite Index and the SZSE Component Index dropped to 5% and 8%, respectively.
It's worth noting that both measure the performance of all stocks traded on the Shanghai Stock Exchange, therefore, making it a key indicator of China's stock market health as a whole.
Shanjie explained that China can meet its economic growth target for the year without stimulus measures, as they will also implement support measures for domestic spending and the property market. Currently, growth predictions for the Chinese economy are 4.7% this year and 4.8% next year.
Economists also agree with Shanjie, stating that the absence of specific stimulus isn't necessarily bad, especially if more concrete support to uphold market gains is introduced.
Reaction from Chinese Leaders
Since 2015, VCPost learned that fiscal stimulus has always been part of China's plan to turn around a falling economy. As a response, the CNBC report showed that Chinese leaders have called for stronger fiscal and monetary policies, specifically introducing several stimulus measures to stabilize the economy, particularly the property market.
This year, China achieved a 5% growth rate in the first quarter, according to VCPost. But the next few months saw disappointing signs of recovery after it fell to 4.7% between April to June, the slowest since 2023. As of now, the country still struggles to achieve a modest rise and investors are closely observing how their new plans will play out without stimulus measures.
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