China has revealed plans to increase its debt issuance in order to stimulate its economy. The announcement, made by China's finance minister Lan Fo'an, included details of a new fiscal stimulus package aimed at addressing debt issues, boosting the property market, and strengthening banks' capital. The specific size of the package, however, was not disclosed.
The move comes as China faces deflation due to weak domestic demand and a struggling property market. In response, the government has been implementing measures to stimulate growth, which have been met with mixed reactions from investors.
Prior to the announcement of the new stimulus package, Chinese equities experienced a rally in September following easing measures introduced by Beijing. However, concerns arose leading up to the meeting on Saturday, causing a 7.1% drop in the benchmark CSI 300 index.
Investors were left wanting more information following the announcement, as the lack of specific details on the size and scope of the stimulus package raised uncertainty. Huang Yan, an investment manager, expressed disappointment in the lack of clarity, stating that the plan lacked key details such as a timetable, specific amount, and allocation of funds.
Overall, the decision to increase debt issuance to boost the economy reflects China's ongoing efforts to address economic challenges. While the announcement of the new fiscal stimulus package was met with some skepticism from investors, the impact of these measures on the economy remains to be seen.