Key Points
Economists are tempering expectations, saying any support will be limited. Goldman Sachs Group Inc. which has cut its forecast for Chinas growth this year to 5.4% from 6% says Beijing is more constrained now because of a shrinking population, elevated debt levels and President Xi Jinpings call for curbing property speculation..
Going down the same old route of using property and infrastructure to engineer a strong economic rebound would be inconsistent with the type of high-quality growth that the leadership has been emphasizing repeatedly, they said.. Chinese stocks fell on Monday, partly due to traders disappointment about the State Councils statement..
Economists have speculated that the stimulus steps could include fiscal measures to boost infrastructure, such as an increase in the bond quota for local governments, more funding from state policy banks and the sale of central government special-purpose bonds...
It is now the ministries, local governments and state-owned enterprises to do the job of promoting growth, he said.. Goldman economists dont expect the central government to issue special sovereign bonds, saying this tool has only been used three times in the past during particularly difficult periods, including when the pandemic first began in 2020 and during the Asian Financial Crisis in 1998..
This time around, the government may accelerate the issuance of local government special bonds, and continue to ease property policies, including lowering down-payment requirements, cutting mortgage interest rates and removing purchase restrictions in top-tier cities, the Goldman analysts said..
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