China has approved an $840 billion plan to help local governments refinance their debt over the next three years, as well as an additional $540 billion to use for the same purpose over the next five years. The plan comes in response to a debt crisis that has saddled local governments in recent years. (New York Times)
Our Take
At this point, it is well known that China’s economy is facing significant headwinds, with growth lagging and consumers reluctant to spend following the COVID-19 pandemic and the property sector crisis. How Beijing would respond to these issues has been the focus of global attention for more than a year now.
Initially, the Chinese government’s response was to double down on President Xi Jinping’s priorities—like export-led growth in strategic sectors—regardless of the consequences for global trade imbalances. More recently, in September, Beijing announced a slew of monetary policies throwing a lifeline to banks, property owners and equity investors, measures meant to spur economic growth and boost confidence in the long-term viability of China’s growth model.