China announces additional stimulus worth CNY1 trillion to rescue economy

China’s Cabinet, State Council, outlined a 19-point policy package on Wednesday while announcing economic stimulus measures worth CNY1 trillion ($146 billion) to stimulate growth affected by covid lockdowns and property market crisis, per Bloomberg.

Key takeaways

The stimulus measures will include “another 300 billion yuan that state policy banks can invest in infrastructure projects, on top of 300 billion yuan already announced at the end of June. Local governments will be allocated 500 billion yuan of special bonds from the previously unused quota.”

“Vowed to make use of “tools available in the toolbox” to maintain a reasonable policy scale in a timely and decisive manner.”

“The economy won’t be flooded with excessive stimulus and china won’t overdraw on its future policy room.”

“Pledged to approve a batch of infrastructure projects. Local authorities are encouraged to use city-specific credit policies to support reasonable housing demand.”

“Pledged to continue lowering financing costs and introduce measures to support the development of private businesses and platform companies.”

Market reaction

USD/CNY was last seen trading at 6.8474, down 0.16% on the day. The spot retreats from two-year highs of 6.8694 reached a day before.