In October 2024, the Chinese government announced a major fiscal incentive plan that is expected to deploy up to 2 trillion yuan (USD283 billion) in new fiscal incentive measures to address challenges in the current economic situation and promote high-quality economic development. This incentives package is seen as a reflection of the market's anticipation for expanded fiscal policies following recent monetary policy moves.

The introduction of these fiscal incentive measures reflects the Chinese government's comprehensive and objective assessment of the current economic situation. As Minister of Finance Lan Foan explained at the press conference, the government is stepping up its counter-cyclical adjustment of fiscal policy to address the downward pressure on the economy and promote high-quality development.

In terms of the specific direction of policy, the market generally expects fiscal policy to focus on the real economy rather than directly stimulating the stock market. The cooperation between the Ministry of Finance and the central bank is viewed as a historic partnership, signaling closer cooperation between the two sides in areas such as bond market operations, which can be interpreted as an unprecedented positive for the market.

Additionally, the market also expects the government to announce a large-scale and comprehensive incentives package to release a strong signal to the market to boost confidence and morale. Some experts suggest that the government should issue special treasury bonds to fill the broad fiscal gap, maintain necessary expenditure levels, and promote economic recovery.

In terms of policy implementation, the government needs to consider long-term structural issues while stimulating the economy. This includes investing in human capital, such as enhancing the quality of public services such as education and healthcare, as well as stimulating the consumption demand of new citizens by means of guaranteed housing and social security reforms, which will in turn drive economic growth.

Overall, the new fiscal incentive measures deployed by the Chinese government in October 2024 aim to address economic challenges and promote stable and high-quality economic development by increasing fiscal spending, optimizing the structure of fiscal policy, and synergizing efforts with monetary policy. The implementation of these measures is expected to have a positive impact on China's economy and instill confidence in the market.

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