Growth Dragons Weekly: More Fiscal Policies and Golden Week Record Spending

What happened in China this week:

1. China Ministry of Finance Announces More Concrete Fiscal Stimulus Policies

2. China's Record Golden Week Spending Signals Returning Consumer Confidence

3. Alibaba Accepting WeChat Pay Helps It Expand to Lower-Tier Markets

4. Tencent Rumored to Acquire Ubisoft Together with Guillemot Family

5. Zijin Buys Ghana Gold Mine with $1 Billion Cash

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#1 China Ministry of Finance Announces More Concrete Fiscal Stimulus Policies

We previously covered China's stimulus measures announced by the National Development and Reform Commission (NDRC), which lacked detailed funding and were overall underwhelming. However, investors have reason to remain hopeful, as the Ministry of Finance held a press conference on October 12, 2024, announcing the following new policies:

• Allocate 400 billion yuan (US$56.57 billion) from the local government debt balance limit to expand local financial resources.

• Tap into an unused bond quota of 2.3 trillion yuan (US$325.3 billion) for local governments.

• Introduce a one-time, large-scale debt ceiling increase for local governments to restructure their hidden debts.

• Allow local governments to use special bonds to purchase idle land from struggling developers.

• Use special bonds to purchase existing commercial homes, prioritizing government-subsidized housing over new construction.

• Optimize tax policies and explore the abolition of value-added tax on ordinary residential buildings.

• Double the quota for college student subsidies and increase the per-person amount.

These policies primarily focus on restructuring local government debt and accelerate new development projects to revitalize China’s real estate. The main take away from the conference is that China still has a very large capacity to expand its stimulus package and we could see more play out in the future. In addition, China banks, the major financial liquidity providers are getting new tier-1 capital to fund business operations, allowing them to stay strong and continue shoring up the market.

Although some observers have noted the lack of exact figures on the additional fiscal stimulus, these are expected to be finalized and approved by the National People’s Congress in the future. Unlike the previous announcement, which left investors underwhelmed, this time we received more concrete details. It's likely only a matter of time before more policies gain clarity and are implemented. As a result, we believe markets should perform better in the coming week.

#2 China's Record Golden Week Spending Signals Returning Consumer Confidence

During the "Golden Week" National Day holiday, Alipay reported a notable surge in both outbound and inbound tourism transactions. In the first four days of the holiday, starting on October 1, Alipay transactions in overseas markets surged by 60% compared to the previous year. Malaysia, South Korea, Thailand, Hong Kong, and Singapore experienced the fastest growth in transaction numbers.