The News
China’s top legislative body is set to meet in Beijing this week, with many investors hopeful that lawmakers will finally green light a stimulus package large enough to buoy the country’s flagging economy, with estimates ranging between two to 10 trillion yuan (around $280 billion to $1 trillion).
China’s central bank announced the stimulus in September, but the size and nature of the package has remained elusive since. The National People’s Congress Standing Committee meeting, which is set to run Monday through Friday, could finally see those details emerge.
Economists expect that the bulk of the package will focus on local government debt, Barron’s reported — “a welcoming gesture to markets,” two Bank of America China economists wrote, as it could relieve some pressure on local governments struggling with the country’s slumped property market. Analysts warned, however, that the path forward is likely to be “slow,” the outlet noted, disappointing investors.
Even if the stimulus does everything Beijing hopes — rallying the stock market, boosting consumer confidence and the housing market, expanding GDP growth — it will likely not lead to long-term changes in how Chinese households spend their money, a Council on Foreign Relations researcher argued in Foreign Affairs Magazine: “Even if the recent stimulus proves surprisingly effective, China’s demographic decline and growing geopolitical tensions with the West suggest that the country’s long-term economic outlook will remain uncertain.”