There now seems to be a strong consensus among Chinese policymakers to put a floor under the risks of an economic slowdown that have been apparent for several quarters. To achieve this, the stimulus plan announced at the end of September is intended to be multidimensional, with a strong emphasis on easing monetary policy and supporting the property market. The recent measures - excluding the increase in the local authority debt ceiling announced on 08 November - could add around 30 to 40 basis points to growth. This would bring annual growth to around 5%, the target initially set by Beijing for 2024. Furthermore, for market confidence to return, the property sector will need sustained support, hence the need for subsidiary fiscal measures.
Under the new Trump administration, we are likely to see the sequential use of tariffs focus on deal structures. In response to the threats of tariffs, Chinese companies have optimised their own supply chains and diversified their geopolitical exposure.
For equity markets, stimulus measures should translate into improved economic activity, better corporate fundamentals and higher earnings, but this will take some time.
View the replay of our webconference focusing on China's stimulus plan on our website: Fidelity International
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