The Chinese government is exploring various avenues to stimulate the economy, as stated by Finance Minister Lan Fo'an. While a major new stimulus plan was not unveiled during his recent remarks, Lan hinted at the possibility of such a plan in the future without providing specific details.
Lan emphasized that discussions are ongoing regarding alternative policy tools that could be implemented in the near future. He highlighted the government's willingness to increase debt and the deficit, noting that there is significant room within the budget to do so.
Despite the lifting of COVID-19 restrictions towards the end of 2022, China's economy has struggled to regain momentum. Companies have scaled back on hiring and wages, while a prolonged downturn in the property market has dampened consumer confidence, leading to reduced spending.
Previous measures such as raising pensions and offering subsidies for trading in old vehicles or appliances have not yielded the desired economic growth. Although initial optimism was seen in Chinese stock markets following recent government interventions to revive the property sector and stabilize financial markets, concerns remain about the sustainability of the recovery.
Investors had anticipated a significant stimulus package announcement, but Lan revealed plans for a series of incremental measures to expedite the implementation of existing policies. These measures include expanding scholarships for students, issuing bonds to bolster major banks' capital reserves, and providing additional support to heavily indebted local governments that have faced challenges in maintaining public services.
