BEIJING – China may deploy as much as 2 trillion yuan (S$369 billion) in fresh fiscal stimulus, as Beijing seeks to shore up the world’s No. 2 economy and boost confidence, investors and analysts said.
The funds, potentially raised by selling more government bonds, could be announced as soon as Oct 12 by the country’s finance minister in a highly-anticipated briefing, according to a Bloomberg survey of 23 market participants.
Beyond the amount of any fiscal package, the target of support will indicate where the government looks to steer its economy after years of debt-fuelled expansion through investment, particularly in real estate and infrastructure.
“The stimulus should be multi-year and targeted to households and not restarting the real estate investment-led growth story,” said professor of economics at Insead Pushan Dutt. “It is the focus of the stimulus rather than the size that is important.”
The weekend press conference, which the government said would introduce measures to strengthen fiscal policy, comes as investors assess how far the authorities plan to go with stimulus efforts that prompted a world-beating stock rally.
China has already cut interest rates and ramped up support for property and stock markets in a barrage of steps announced late September. But investors have clamored for fiscal interventions economists believe are crucial to lifting confidence.
Onshore Chinese shares remained volatile throughout the week after ending a 10-day rally on Oct 9, as officials disappointed by announcing no major new stimulus following a weeklong holiday.
“Government agencies are now expected to feel the pulse of the market before publishing policies,” said Mr Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered. “They should avoid letting expectations climb and crash to deal a blow to market sentiment.”
Most of the respondents, including economists, strategists and fund