China's Big Budget Meeting: What to Expect

Get ready for a big event! China's parliament is set to meet from November 4 to 8. This isn't just any meeting—investors are eagerly waiting for news about the country's fiscal stimulus. Last year, the same meeting saw China's fiscal deficit jump to 3. 8%, so this year's gathering could bring more changes. China's economy grew by 4. 8% in the first three quarters of 2023, a bit slower than expected. To keep things moving, the government might need to adjust its budget or deficit. Bruce Pang, an economist, says this meeting is crucial for that. He notes that recent stimulus measures have shown the need for more fiscal support. Earlier this month, China's Finance Minister, Lan Fo'an, hinted that there's room to increase the deficit and issue more bonds. This follows a top-level meeting in September led by President Xi Jinping, which pushed for stronger fiscal and monetary policies. So, what's next? The People's Bank of China has already cut rates and supported the real estate market. But stocks have been volatile, waiting for concrete steps. Pang believes this parliamentary meeting will reveal how the budget will be adjusted and if there are plans for new bond issuance. Don't expect a massive boost to consumption right away. Experts think struggling local governments will get help first. China aims for around 5% economic growth in 2024, so this meeting could set the stage for how that goal will be achieved.