China Considers $278 Billion Package to Support Stock Markets
Chinese policymakers are reportedly contemplating measures to bolster the country’s struggling stock markets, including mobilizing around 2 trillion yuan ($278 billion) through offshore accounts of Chinese state-owned companies. The funds would be used to purchase onshore stocks through Hong Kong markets, aiming to stabilize the market. In addition, local funds amounting to 300 billion yuan have been set aside to invest in onshore shares through state-owned financial firms.
This move comes as mainland China’s CSI 300 index suffered an 11.4% decline last year, marking its third consecutive year of falls. Furthermore, Hong Kong’s Hang Seng index fared even worse, plummeting nearly 14%, making it the worst-performing major Asian stock market.
Chinese Premier Li Qiang emphasized the necessity of stabilizing the stock markets during a state council meeting, stating that more powerful and effective measures should be taken to restore confidence. While further details about the rescue package were not provided, Premier Li expressed the importance of reinforcing macro policy orientations, coordinating policy tools, and promoting stable economic recovery.
China has previously emphasized that it has not heavily relied on stimulus measures, opting instead to strengthen internal drivers. Premier Li highlighted this during his speech at the World Economic Forum in Davos, where he noted China’s 5.2% GDP growth in 2023.
The implementation timeline and specific details of the proposed measures remain unknown. However, the intention to stabilize the stock markets demonstrates China’s commitment to addressing economic challenges and promoting the healthy development of its capital market.
In summary, Chinese policymakers are reportedly considering a substantial rescue package of $278 billion to support their struggling stock markets. These funds, sourced from offshore accounts of state-owned companies, would be utilized to purchase onshore stocks through Hong Kong markets. The initiative aims to stabilize the market following consecutive years of decline in mainland China and the poor performance of Hong Kong’s stock market. Chinese Premier Li Qiang stressed the importance of stabilizing the markets during a recent state council meeting, highlighting the need for powerful and effective measures. While specific details are yet to be disclosed, China’s efforts to reinforce macro policy orientations and promote stable economic recovery underscore the nation’s commitment to addressing economic challenges and ensuring the healthy development of its capital market.
