China's National People's Congress Standing Committee Meeting Concludes Today, Anticipation Grows for Economic Stimulus Package Announcement

Forex - Following the completion of the five-day meeting of China's National People's Congress Standing Committee, further stimulus announcements are expected. Officials have increased stimulus announcements since the end of September, fueling a rally in stock prices. President Xi Jinping led a meeting on September 26, calling for strengthened financial and monetary support and an end to the collapse in the real estate market.

Although the People's Bank of China has already reduced several interest rates, significant increases in government debt and spending require approval from the National People's Congress, the country's parliament. This approval may have been granted during the week-long gathering of the legislative body'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%.

Following Donald Trump's victory in the U.S. presidential election this week, expectations regarding the scale of this financial support have increased, as he threatened to impose hefty tariffs on Chinese goods. However, some analysts remain cautious, warning that Beijing may maintain a conservative approach and may not provide direct support to consumers.

According to state media, officials have so far reviewed plans to increase the limit on how much local governments can borrow during the legislative meeting. Nomura estimates that China's hidden debts of this nature range between 50 trillion yuan and 60 trillion yuan (approximately 7 trillion dollars to 8.4 trillion dollars) and believes that Beijing may allow local governments to increase debt issuance by 10 trillion yuan over the next few years. Nomura stated that this could relieve local governments from annual interest payments of 300 billion yuan.