MOF promises more spending but scale still unclear

China’s Finance Ministry has pledged to significantly increase government debt, as well as ensure that RMB2.3trn in unused funds (equivalent to 1.6% of GDP) are spent by year-end. The latter should ensure that GDP growth ticks up in Q4 and that the annual target is narrowly met. A decision to allow local governments to use bond issuance to support the housing market is also welcome. But notably absent was any mention of large-scale handouts to consumers. And the lack of forward guidance on the scale of next year’s budget deficit means it is still difficult to judge how large and long-lasting the fiscal boost will be. We’ve nudged up our 2025 growth forecast slightly but still expect a slowdown next year.