Xi Jinping plans to launch a desperate £200bn project in a bid to save the Chinese economy.
This comes after Chinese Prime Minister Li Qiang called on the authorities to take “strong” measures to control the economy.
Earlier this week, China’s stock market fell to its lowest level in five years.
China’s CSI 300 index has lost a fifth of its value over the past nine months, hitting its lowest level since the start of 2019 this week. Meanwhile, China’s Nasdaq Golden Dragon also fell for the sixth straight day.
Xi Jinping plans to launch a multi-billion dollar plan to help the Chinese economy
Reuters/Getty
The decline in investor confidence began in 2021 when real estate giant Evergrande collapsed. Li held a meeting with the Chinese Cabinet on Monday as part of a plan to boost the investment value of listed companies, Bloomberg reported.
The report said that the Chinese authorities are considering mobilizing about two trillion yuan (about 220 billion pounds sterling) to stabilize the declining stock market.
This comes as China’s State Council said it needs to improve macro policy in order to boost the country’s economic recovery from the Covid pandemic.
The country’s stock market saw an initial jump when restrictions were lifted. However, the rebound was not sustained and the economy continued to perform poorly.
The latest developments
Evergrande collapses in 2021
Reuters
Carsten Meinke, commodities analyst at Julius Baer, said the distressed real estate market and low consumer confidence may not be helped by the measures announced this week.
China’s problems are deep-rooted, Michael Herson, an economist at 22V Research, told Bloomberg.
“The biggest challenge facing stock markets is macroeconomic, not technical,” Herson said.
“In an environment characterized by weak private sector demand and prolonged deflation, it is difficult to arouse investor interest in the revenue and profit growth prospects of Chinese companies.”
China is also facing a demographic crisis with a falling birth rate and a shrinking working-age population. The country’s population fell by two million last year, and more than a fifth of its population is now aged 60 or over.
In an attempt to boost the market, China’s $1.24 trillion sovereign wealth fund last year bought exchange-traded funds (ETFs) and bank stocks.
A further 733bn yuan (£81bn) was introduced into the financial system through the People’s Bank of China.