China's Bold $1.4 Trillion Fiscal Boost: A Lifeline for Economic Revival

China is considering a fiscal package of over 10 trillion yuan to revive its economy. This involves issuing sovereign and local government bonds, amidst a property crisis and local government debts. Authorities may strengthen the plan depending on the U.S. election outcome.

China is poised to initiate a massive 10 trillion yuan fiscal plan aimed at revitalizing its faltering economy. Sources indicate that the Standing Committee of the National People's Congress (NPC) plans to approve this financial strategy by early November.

The proposal, part of which involves the issuance of sovereign and local government bonds, is set to bolster local authorities dealing with off-the-books debt. This significant debt issuance could equate to over 8% of China's economic output, a move driven by persistent property sector challenges and rising local government liabilities.

With the U.S. presidential election on the horizon, China remains flexible, potentially amplifying the fiscal package if Donald Trump is elected. Meanwhile, complementary stimulus initiatives, along with special-purpose bonds, are anticipated to assist in infrastructure funding and managing land supply.

(With inputs from agencies.)