China has kept the world on the edge of its seat for a significant spending package after announcing in late September an injection of about 2 trillion yuan ($283 billion) into its flailing economy.
Yet nothing happened at two high-profile press conferences on Oct. 8 and Oct. 12. Senior leaders discussed an upcoming fiscal stimulus extensively but stopped short of sharing any details.
How much does China need to achieve the 5 percent growth and bring back the economy? Prominent Chinese economists floated numbers between 8 trillion yuan and more than 10 trillion yuan.
Daniel Rosen, founding partner of Rhodium Group, has said that if China needs a stimulus of more than 6 trillion yuan to meet the growth target, “that means they are growing zero percent this year.”
Some experts have told The Epoch TImes it’s time to view China’s economy through the lens of survival rather than growth.
“The Chinese economy is not seeking growth anymore; it’s seeking survival. Therefore, stop looking at it the old way, ‘The growth rate used to be 10 percent, then 8, and now 5,’” Mike Sun, a U.S.-based businessman with decades of experience advising foreign investors and traders in China, told The Epoch Times.
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Christopher Balding, an expert at the Henry Jackson Society, a UK-based think tank, views China’s Sept. 24 package as a patchwork not a stimulus. China made similar moves in 2022 and 2023, just not all at the same time.
A $283 billion capital injection to China’s $18 trillion economy is less than 2 percent and next to nothing, he added.
China’s decision to inject core tier one capital—reserves banks hold to run their daily operations and cover potential losses—at six major commercial banks was a new move, the first time since 2008.
“That’s making sure that the banks don’t collapse so that the big banks can buy smaller banks on the verge of collapse. So you’re not really stimulating anything. You’re just patching it up,” said Balding.
Beijing chose to boost the stock market and stabilize house prices at the same time because the property market can’t be revived overnight, but China’s policy-driven stock markets could instantly show an artificial bull market, according to Sun.
And unpredictable fiscal measures? Sun thinks the Chinese Communist Party intended so in order to keep attracting capital into the stock market. He added that the unpredictability would make it difficult for investors to time their exit without stomaching a potential loss.
China’s leader Xi Jinping is widely expected to continue his industrial policy of developing advanced manufacturing, which hasn’t been able to lead economic growth by compensating for the housing market’s decline.
By rescuing the property and financial markets, Xi is buying time because digging oneself out of the current economic hole may take years or decades, Sun said.
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