China poised to approve more help for ailing economy

Chinese officials are expected to unveil billions of dollars in support for their struggling economy Friday. Photo: WANG Zhao / AFP
Source: AFP

China is expected to unveil a huge support package for the struggling economy Friday as officials wrap up a key meeting with an eye on the possibility of intensified trade tensions with US president-elect Donald Trump.

Economists predict Beijing will approve hundreds of billions of dollars of help, with a focus on indebted local governments as well as cash for banks aimed at writing off non-performing loans.

Policymakers were keeping tabs on the US vote as they gathered in the Chinese capital this week for a meeting of the country's top lawmaking body.

Trump promised during his campaign of punishing tariffs on Chinese goods that threaten further grief for the world's second-largest economy, which is already grappling with a prolonged housing crisis and sluggish consumption.

Observers say Beijing could seek to cushion that blow with a long-awaited "bazooka stimulus" for the economy -- though caution details might still take time.

The meeting, originally scheduled for late October, was likely pushed back to allow "policymakers a chance to address a possible Trump win", Lynn Song, chief economist for Greater China at ING, said.

"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 this week reported that officials had reviewed a bill to raise local government debt ceilings.

That move, touted last month, would allow authorities to borrow more to fund the acquisition of unused land for development -- a move aimed at pulling the property market out of a prolonged slump.

Beijing in September began to unveil a raft of measures aimed at boosting economic activity, including rate cuts and the easing of some home purchasing restrictions, but analysts have bemoaned the lack of detail so far.

Trump's re-election provides a need for greater urgency, experts say, though caution may still prevail as officials try to avoid piling on more 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 this week said he was "fully confident" that the country would hit its growth target of around five percent for 2024, even after figures showed the economy saw its slowest expansion in a year and a half during the third quarter.

And in a rare bright spot, data Thursday showed the nation's exports surged last month at their fastest pace in more than two years.

But 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.

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Source: AFP