China stimulus impact on economy “unnoticeable”

Tuesday 5 November 2024

The Chinese stimulus keeps getting downgraded. ANZ this time.

China National People’s Congress preview

• We expect a CNY10trn bond issuance plan for a debt swap program but the economic impact will be indirect and unnoticeable.
• Direct economic stimulus will only be CNY1trn via frontloading the issue of special local government bonds, helping GDP to meet the 5% target.
• The short-end interest rate is now higher than the reverse repo rate. China will also cut the interest rate and RRR to accommodate the bond issuance.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.