China's Massive Fiscal Move: Could $1.4 Trillion Boost the Economy?

China is considering a significant fiscal stimulus, planning to issue over 10 trillion yuan in extra debt to rejuvenate its economy. Analysts suggest it addresses housing and local government bonds, with the market poised for additional policy signals should Donald Trump win the upcoming U.S. election.

China is reportedly on the brink of approving a sweeping fiscal stimulus plan that could see over 10 trillion yuan ($1.4 trillion) in extra debt issued to stimulate its ailing economy. This proposal could be further amplified if Donald Trump emerges victorious in the upcoming U.S. election.

Analysts, including Lynn Song from ING, indicate that such a sizable package would align with expectations, proposing support for local government bonds and property purchases. This strategic allocation aims to fortify the property market and expedite purchasing momentum to reduce housing inventories swiftly.

Linda Lam of UBP noted that while the proposed amount appears on the higher end of predictions, it is within anticipated ranges. However, she emphasizes that effective implementation, driven by monetary policies and consumption dynamics, is crucial to the success of the fiscal measures.

(With inputs from agencies.)