IFF Newsletter | China Unleashes Stimulus Package to Boost Economy

TIME：2024-09-29

From the Editor

In a significant move to bolster its economy, China unveiled a comprehensive package of measures at a rare joint briefing by top financial regulators on Tuesday.

TheParis-based OECD said in its latest economic outlook on Wednesday that it expected global GDP growth to stabilize at 3.2 percent in both 2024 and 2025, while inflation should continue to ease.

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Latest from the IFF

IFF Co-Chair attends UN General Assembly Summit of the Future meeting

International Finance Forum (IFF) Co-Chair Han Seung-soo, who is also Chair of the Council of Presidents of the United Nations General Assembly (UNCPGA) and former Prime Minister of the Republic of Korea, is participating in the 79th Session of the United Nations General Assembly (UNGA 79), which runs from September 10 to 30 in New York. Han also attended an UNCGPA meeting on September 22 to discuss the highly anticipated Summit of the Future, which underscores the urgent need for enhanced international cooperation to address pressing challenges such as climate change, poverty and inequality, while also tackling the impacts of ongoing conflicts and global health crises.

The IFF's 2024 Academic Workshop: Filling the Gaps in the Global Financial Architecture

This session will be moderated by Gerry Rice, IFF Vice President and former Director of the Communications Department of the International Monetary Fund and World Bank. The workshop’s main speaker will be Siddharth Tiwari, IFF Vice President and former Chief Representative for Asia and the Pacific at the Bank for International Settlements. Mr Tiwari is also Principal Author for the Bretton Woods Committee’s Multilateral Reform Working Group, and during this workshop he will discuss the findings of this working group’s report. Although the world has achieved great progress in achieving rising living standards and reducing poverty, especially during the last 80 years, continued progress is not inevitable because global threats like climate change and pandemics loom ever larger, and there has not been enough of a coordinated global response to tackle these threats and implement a comprehensive strategy.

【IFF Live】The Central Bank Releases Major Policy to Boost Market Confidence and Trading Activity

From September 20th to 25th, the IFF Live Broadcast hosted three live sessions on the topics of Japan's real estate changes over the past 30 years, digital economy and artificial intelligence, and the reduction of interest rates on existing home loans.

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China News

China Unleashes Stimulus Package to Boost Economy

China unveiled more measures to boost its economy in a rare briefing on Tuesday by the head of the People's Bank of China, along with the securities and financial regulators.

People’s Bank of China Governor Pan Gongsheng announced that the central bank would cut the reserve requirement ratio (RRR) by 0.5 percentage points, reduce seven-day policy rate from 1.7% to 1.5%, in a bid to both boost lending and reduce the existing loan burdens, and the further RRR cuts are possible.

In the real estate sector, mortgage rates for existing home loans will be lowered by an average of 0.5 percentage points, and the minimum down payment ratio for second homes nationwide will be reduced from 25% to 15%, Pan said.

Pan also announced at least 500 billion yuan of liquidity support for stocks. There will be a swap facility allowing securities, funds and insurance companies to tap the PBOC to buy stocks. He added that authorities were studying setting up a stock stabilization fund, but did not disclose details.

China Securities Regulatory Commission Chairman Wu Qing said that the CSRC would release six measures to promote mergers and acquisitions, and worked with various parties to facilitate the circulation of private equity and venture capital funds in the process of fundraising, investment, management and withdrawal.

The CSRC will issue a guideline to encourage medium and long-term funds to enter the capital market, he said.

National Financial Regulatory Administration chief Li Yunze annouced that China would add tier-one capital to six major commercial banks.

China-ASEAN Expo further drives economic, trade cooperation

The 21st China-ASEAN Expo kicked off on Tuesday in Nanning, Guangxi Zhuang Autonomous Region, with approximately 1,100 attendees emphasizing the importance of deepening economic and trade cooperation between China and ASEAN countries. The event's theme focuses on promoting the development of China-ASEAN Free Trade Area 3.0 and high-quality regional growth.

China's Vice Minister of Commerce Li Fei highlighted the continued upgrading of bilateral economic and trade cooperation, noting positive progress in negotiations for version 3.0 of the China-ASEAN Free Trade Area. He stated that mutually beneficial cooperation between China and ASEAN countries has reached new levels.

The five-day expo covers an exhibition area of nearly 200,000 square meters, with Malaysia as the country of honor. Participants include Chinese and foreign leaders, government officials, entrepreneurs, scholars, and representatives from international organizations.

China Expands Equity Investment Pilot For Asset Managers

On Tuesday, the National Financial Regulatory Administration announced the expansion of the pilot program for equity investments by financial asset management companies.

According to a circular issued by the administration, the pilot program will now extend beyond Shanghai to include 17 other cities, including Beijing, Tianjin, Chongqing, Nanjing, Hangzhou, Hefei, Jinan, Wuhan, Changsha, Guangzhou, Chengdu, Xi'an, Ningbo, Xiamen, Qingdao, Shenzhen and Suzhou.

China Will Follow WTO Rules to Handle EU's Challenge of Dairy Products Anti-subsidy Probe

The Chinese Ministry of Commerce (MOC) on Monday said that it has received the consultation request that the European Union (EU) issued through the World Trade Organization (WTO) regarding China's anti-subsidy investigation into imports of EU dairy products.

In a statement, the MOC said China regrets that the EU has challenged the case through the WTO dispute settlement mechanism, but the country will handle the challenge in accordance with relevant WTO rules.

China, Switzerland Open Talks on Free Trade Agreement Upgrade

China and Switzerland on Monday began negotiations on an upgrade of the Sino-Swiss free trade agreement (FTA), with both sides agreeing to intensify consultations and reach a high-level upgrade agreement as soon as possible on the basis of mutual benefits.

Chinese Minister of Commerce Wang Wentao said that since it came into effect 10 years ago, the Sino-Swiss FTA has played a positive role in promoting the growth of bilateral trade, and enterprises in both countries have truly benefited.

Upgrading the FTA will help expand bilateral trade and boost two-way investment, and promote the upgrading of economic and trade cooperation between the two countries, Wang said, adding that it will also showcase the two countries' support for free trade and openness to the outside world at a time when economic globalization is encountering headwinds.

China's vehicle software market exceeds 65 bln yuan

China's vehicle software market is worth more than 65 billion yuan, accounting for 30 percent of the country's total software market, according to a report jointly published by China Automotive Engineering Research Institute Co., Ltd and China Economic Information Service on Friday.

Industry experts highlight that the automotive sector is transitioning towards intelligent technologies, with software, operating systems, and car chips at its core. The report also notes an increasing localization rate of automobile chips, with power semiconductors reaching 15-20% localization. As a major economic pillar, the automobile industry's entire industrial chain contributes 10% to China's GDP.

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International News

Global Economy Growth Stabilizes at 3.2 pct in 2024, 2025, Says OECD

Global gross domestic product (GDP) growth is projected to stabilize at 3.2 percent in both 2024 and 2025, while inflation should continue to ease, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday in its latest economic outlook.

According to the OECD economic outlook, annual GDP growth in the United States is projected to slow down to 2.6 percent in 2024 and further down to 1.6 percent in 2025, but be cushioned by monetary policy easing.

For Eurozone, the OECD said that GDP growth is projected to be 0.7 percent in 2024 and speed up to 1.3 percent in 2025, with activity supported by a recovery in real incomes and an improvement in credit availability.

Asia-Pacific Still Faces Challenges But Resilient, Says ADB

The Asian Development Bank (ADB) maintained its forecast 5% GDP growth for the Asia-Pacific region this year in its report released on Wednesday, as made in the July report. The ADB said that the region's economy is facing challenges but still resilient.

The Asian Development Outlook September 2024 kept its GDP forecast for the Asia-Pacific region at 4.9 percent for next year, unchanged from its July forecast.

Inflation in the region was forecast at 2.8 percent for 2024, while inflation for 2025 was 2.9 percent, the report showed.

Australia's Central Bank Keeps Cash Rate on Hold

Australia's central bank on Tuesday kept the country's cash rate on hold for the seventh consecutive meeting, even as some other major economies started to loosen monetary policy to stimulate economic growth.

The board of the Reserve Bank of Australia (RBA) said in a statement that it decided to leave the cash rate target unchanged at 4.35 percent, where it has been since November 2023, and the interest rate paid on Exchange Settlement balances unchanged at 4.25 percent.

S. Korea's Consumer Sentiment Worsens in September

South Korea's consumer sentiment worsened for the second consecutive month due to rising worry about a delayed recovery in domestic demand, the data from Bank of Korea (BOK) showed Wednesday.

The composite consumer sentiment index (CCSI), which gauges the sentiment of consumers over the economic situation, fell 0.8 points over the month to 100.0 in September after going down 2.8 points in the previous month, according to the central bank.

Germany's Exports in July Down 1.2 Pct Year-on-Year

The German economy remains mired in stagnation, with continued weakness expected throughout2024, the Macroeconomic Policy Institute (IMK) said in the report on Tuesday.

The Germany's gross domestic product will grow by 0.4 percent this year, with recovery expected to accelerate next year, reaching a growth rate of 1.1 percent, the leading German research institute said.

The report highlights that private consumption, driven by real wage increases and renewed consumer confidence, will play a crucial role in supporting the economic recovery. Meanwhile, exports and investment in equipment are expected to contribute positively to the rebound.

G7 Ministers Warn of AI Impact on Cultural Sector

Alongside the opportunities, significant risks posed by Artificial Intelligence (AI) to the cultural sector were highlighted at the Group of Seven (G7) ministers' cultural meeting, which concluded on Saturday in Naples, Italy.

The leaders agreed to work together to address the ethical, legal, economic, and social implications of Generative AI and AI-powered tools for the cultural and creative industries, and called on "identification and authentication, where technically feasible, of cultural content entirely or partially generated, modified or altered by AI systems."