China to tap stimulus arsenal with bond-purchase mechanism, finance briefing

Central bank and finance ministry held a joint working group, with Ministry of Finance set to hold a press conference on Saturday, but markets still fell

Reading Time:3 minutes

Hoardings surround the People’s Bank of China building in Beijing. Photo: Bloomberg

Published: 1:51pm, 9 Oct 2024Updated: 5:22pm, 9 Oct 2024

China’s central bank and finance ministry held their first joint working group meeting on the treasury bond trade, a sign of closer monetary and fiscal policy coordination, as Beijing strives to achieve its “around 5 per cent” annual economic growth target, although the moves failed to boost stock markets on Thursday after a recent rally.

The two sides also exchanged views on China’s bond market development, vowing to provide “appropriate environment” for government bond trade, according to a statement from the People’s Bank of China on Wednesday.

The move came at a time when the market has speculated about more fiscal stimulus after the central bank announced a larger than expected interest rate cut late last month and the top leadership also pledged policy coordination to stabilise the economic growth at a Politburo meeting.

Separately, the Ministry of Finance is set to convene a press conference on Saturday to introduce work on strengthening countercyclical adjustments of fiscal policy and promoting economic development, with finance minister Lan Foan expected to brief the media and take questions.

But despite the announcements, stock markets in Hong Kong and mainland China trended down on Wednesday.

The Shanghai Composite Index fell by 6.62 per cent to 3258.86, representing the biggest daily fall in more than four years.