China’s National People’s Congress Standing Committee (NPCSC) meeting, set for November 8, is expected to finally reveal major fiscal stimulus plans. With China’s economic recovery faltering, analysts anticipate key decisions addressing local debt, property market buybacks, and potential new funding sources.
The meeting’s timing, shortly after the US elections, raises questions about the potential impact of international developments on China's approach. Analysts from Citi have spotlighted five pressing areas likely to shape the NPCSC’s agenda on Beijing’s strategies.
1. What to Watch from the NPC Standing Committee Meeting?
Citi noted that investors and analysts should closely monitor the NPCSC's fiscal stimulus decisions, especially measures targeting China's slowing economic growth. Expectations center on possible legislative approvals for new fiscal measures that could support local governments, real estate buybacks, and overall debt management.
2. What is the Time Horizon?
According to Citi, the proposed fiscal initiatives likely involve staggered timelines. Immediate measures may target 2024 growth, while long-term plans for local debt restructuring and property buybacks could extend over several years.
3. How Much Funding is Needed for Property Buyback?
The NPCSC may discuss property buybacks with estimated funding needs of around RMB4 trillion to improve high inventory levels and provide stability in the real estate market. Additionally, the buyback program might receive support from the People’s Bank of China to promote annual investments to reach approximately 20% of annual home sales.
4. What is Not on the Table for Now?
Citi also pointed out that some fiscal policies may not be on the agenda. For instance, an increase in the headline fiscal deficit beyond 3% of GDP is unlikely, as NPCSC policymakers aim to maintain economic stability without overextending fiscal resources. Measures focusing solely on direct consumer stimulus may also remain limited.
5. Will the NPCSC Meeting Be Conditional on the U.S. Election?
There is speculation that the NPCSC meeting could be strategically timed following the US elections, potentially influencing China’s policy stance depending on international outcomes. However, official statements confirming this conditionality are yet to be made, and any alignment with US political events would be cautiously framed in a broader economic context.