China has allocated 200 billion yuan ($28 billion) for local government investment projects this year in a bid to meet its economic growth targets. The announcement was made by the country's top planning agency at a press conference, disappointing investors who were expecting a larger stimulus package.
The commission's chairman expressed confidence in achieving the annual economic and social development goals, despite concerns raised by weak economic data over the summer. China had set a 5% growth target in March, but challenges such as a property crisis, weak spending, and high youth unemployment have impacted the economy.
To assist local governments burdened by debt, Beijing will provide 100 billion yuan from the central government's budget and an additional 100 billion yuan for investment projects. Economists had anticipated further fiscal measures totaling around 2 trillion yuan to be announced this month to support growth.
While recent measures have focused on monetary policy, economists stress the need for fiscal easing to stimulate sustainable growth. The lack of significant new fiscal measures in the recent announcement dampened stock market enthusiasm in Hong Kong and mainland China.
Experts have suggested issuing long-term government bonds worth up to 10 trillion yuan to fund infrastructure and public works projects. The People's Bank of China had previously reduced interest rates and reserve requirements for banks, along with other measures to support the property sector and stock market.
Additional initiatives included cash handouts to disadvantaged citizens and subsidies for recent graduates struggling to find employment. The ruling Communist Party's Politburo also emphasized the need for urgent action to address economic challenges and pledged to increase fiscal spending, stabilize the property market, and enhance employment opportunities.
