China announced on Saturday October 12 that it would provide its economy with budgetary support of 325 billion dollars (around 300 billion euros) over the next three months, in order to support the banks, consolidate the real estate market and free up consumer spending in Beijing’s largest aid package since the global financial crisis. This highly anticipated recovery plan comes on top of a series of measures announced in recent weeks, including interest rate cuts and providing liquidity to banks.
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With our correspondent in Beijing, Clea Broadhurst
The key statement from Beijing could be that China sees room to increase the budget deficit. Over the next three months, a total of 2.3 trillion yuan of special bond funds can be used in different places, including supporting infrastructure and boosting investment.
Do more locally
The measures still involve pushing local governments to do more – to issue more bonds to pay hidden debts and to buy back unsold homes. But local officials are hesitant to participate in the home purchase program because they fear housing prices will fall further and there will be no lucrative returns in the area.
Stabilize the economy
The main ones Chinese banks also said they would cut interest rates on existing mortgages from October 25. The measures are aimed at stabilizing China’s economy, which seeks to achieve 5% GDP growth in 2024. Analysts say deeper reforms will be needed to address structural problems like debt in the real estate sector and weak demand. interior.
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