China’s $283 Billion Rescue Plan: Another Stimulus Package on the Way for the Dragon Economy

China might unveil a new stimulus package in the coming week as it looks to strengthen the world’s second-largest economy and restore confidence. Many are expecting that the country’s finance minister will introduce the fresh stimulus, worth as much as 2 trillion yuan ($283 billion), during the briefing on Saturday. This is as per a Bloomberg survey of 23 market participants.

As investors evaluate the extent of government's stimulus plans, which has already given a boost to the stock market, a weekend press conference is expected to announce measures to strengthen fiscal policy.

Meanwhile, China's stock market is already witnessing a sharp uptrend. In the last one month, the CSI 300 Index (one of the benchmark indices in the country) surged by over 20 per cent.

As the nation continues to face a slow down in economic growth, China is taking every possible step to ensure a sharp recovery. In late September, the country announced a cut in interest rates and increased support for the property and stock markets.

However, investors are still calling for fiscal actions that economists believe are essential for rebuilding confidence, according to the Bloomberg report.

China's Stock Market Rebound

The first half of 2024 saw a lackluster performance in China's stock market, with major indices experiencing subdued performance.

However, following the announcement of the stimulus package last month, the markets witnessed a sharp upward trend as foreign investors flocked to take advantage of cheap valuations.

Elara Securities stated in its report that there is a chance China's equity market could continue to outperform its peers in the near term.

Since last month, the SSE Composite Index has surged over 24 percent before giving up some of those gains. "Tactically from a short term (3-6 months) perspective, China’s equities look attractive as the recent measures keep hope alive that policymakers are willing to act, and, as such, will help to create a floor to further moderation," the brokerage house said.

From a long-term perspective, we do not see the measures announced to date changing the track of the economy unless it is backed by an incremental fiscal stimulus that concretely addresses either consumer confidence or property market malaise, the brokerage house further added.