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China announces additional CNY 1 trillion worth of stimulus to rescue economy

The State Council of China outlined on Wednesday a 19 point policy package while announcing economic stimulus measures worth CNY 1 trillion ($146 billion) to stimulate growth affected by the closures derived from covid and the housing market crisis, according to Bloomberg.

Key points

The stimulus measures will include “another 300 billion yuan that state policy banks will be able to invest in infrastructure projectsin addition to the 300 billion yuan already announced at the end of June.” Local governments will be distributed 500 billion yuan of special bonds of previously unused quota”.

It promises to make use of the “tools available in the toolbox” to maintain reasonable policy scale in a timely and decisive manner.

The economy will not be swamped with excessive stimulus, and China will not overextend its future policy space.

The government is committed to approving a batch of infrastructure projects. Local authorities are encouraged to use city-specific credit policies to support reasonable housing demand.”

There is also a commitment to keep lowering financing costs and to introduce measures to support the development of private companies and platform companies.”

Source: Fx Street

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