(Bloomberg) — China will give a letter on a plan to allow local governments to refinance their off-balance sheet debts at 4 p.m. Friday in Beijing, where officials are expected to reveal more details about a budget package to help the slowing economy.
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Finance Minister Lan Fo’an and Xu Hongcai, director of the National People’s Congress’ Budget Committee, will speak to the media at the end of a week-long meeting of the country’s top legislative body. A press invitation does not mention any policy plan other than the debt swap program discussed by top lawmakers earlier this week.
Bloomberg Terminal users can click here for a live blog of the briefing.
China’s CSI 300 Index continued its declines in the final 30 minutes of onshore trading after the briefing announcement, before closing 1% lower. The Hang Seng Index fell 0.8% as of 3:28 PM local time.
The debt swap program is “partial, and certainly far from, direct countercyclical measures,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. ‘The market is looking for a direct injection of, for example, a trillion yuan or more. 2 trillion to support growth.”
Investors have been waiting for the Standing Committee of the National People’s Congress to provide a fuller picture of China’s fiscal plan, after Lan promised additional measures to revive confidence in mid-October. He hinted at a refinancing plan that would ease local governments’ debt burden and give them more room to boost growth, though some analysts have argued that more direct fiscal stimulus is needed to turn the economy around.
China’s economy grew 4.6% in the third quarter, the weakest pace since March last year, casting doubt on Beijing’s ability to meet its annual growth target of around 5%. That slowdown prompted policymakers to switch to more supportive policies, including interest rate cuts and help for the stock and real estate markets.
The shift has sparked a historic stock rally and prompted global banks, including Goldman Sachs Group Inc., to raise their forecasts for the $18 trillion economy. Key indicators for October showed signs of stabilizing the economy, but Donald Trump’s re-election this week has fueled calls for Beijing to strengthen policies to boost demand to offset a potential decline in exports in the case of a new trade war.
