[News] China NDRC Fails to Announce New Stimulus Policy, Market Disappointment Leads to Loss of Gains

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After the People’s Bank of China (PBoC) announced reserve requirement ratio and interest rate cuts on September 24, many economists expected that China would introduce more stimulus measures in the near term. In line with these expectations, the National Development and Reform Commission (NDRC) held a press conference on October 8 to unveil the “Implementation of a Basket of Incremental Policies.”

When questioned by reporters about the implementation and details of the policy, the NDRC largely reiterated previous measures, including increasing government investment, boosting the income of low- and middle-income groups, and providing student-related support programs. However, in terms of future policy details, the only mention was that China would continue issuing ultra-long-term government bonds next year to support major projects and would allocate RMB 100 billion of the 2025 government investment budget to critical areas in advance.

Private consumption and investment were also lacking detailed explanations. In recent years, China’s domestic consumption and investment demand have declined due to the ongoing real estate crisis. According to the latest data, China’s retail sales in August grew by only 2.1%, continuing a downward trend, while financial institution loan balances grew by 8.5% year-on-year, marking the lowest growth in nearly 24 years.

 

 

Overall, compared to the policies announced on September 24, this press conference did not introduce any new major stimulus measures or provide details on policy implementation. Although the NDRC stated that they would release detailed plans soon and expressed confidence in achieving the annual growth target of 5%, the second-quarter GDP growth was only 4.7%, and recent data indicates that domestic demand remains weak, casting doubt on whether the target can be realistically met.

 

The market appeared disappointed by the lack of substantive policy announcements. Before the press conference, the CSI 300 Index opened with a 10% gain, but after the event, it gave back approximately 6% of the gains.

Source:  National Development and Reform Commission (NDRC)