China's National People's Congress Standing Committee Meeting Concludes Today, Anticipating Announcement of Financial Stimulus Package

Forex - Following the completion of the five-day meeting of China's National People's Congress Standing Committee, further stimulus announcements are anticipated.

Officials have ramped up stimulus announcements since the end of September, fueling a rally in stocks. President Xi Jinping led a meeting on September 26, calling for strengthened fiscal and monetary support, as well as measures to halt the collapse of the real estate market.

Although the People's Bank of China has already cut several interest rates, substantial increases in state debt and spending require approval from the country's parliament, known as the National People's Congress. This approval may have been granted during the week-long gathering of the legislature's standing committee. According to state media, during a similar meeting held last October, officials approved an increase in China's budget deficit from 3% to 3.8%.

Expectations regarding the scale of this fiscal support have risen following Donald Trump's victory in this week's presidential election in the U.S., where he threatened to impose heavy tariffs on Chinese goods. However, some analysts remain cautious, warning that Beijing could maintain a conservative stance and may not provide direct support to consumers.

According to state media, officials have so far reviewed a plan to increase the limit on how much local governments can borrow during the assembly meeting.

Nomura estimates that China's hidden debts amount to between 50 trillion yuan and 60 trillion yuan (approximately 7 trillion to 8.4 trillion dollars), and they believe that Beijing could allow local governments to increase their borrowing by 10 trillion yuan over the next few years. Nomura stated that this could relieve local governments from paying 300 billion yuan in interest annually.