A fiscal stimulus package is anticipated to be announced by China.

• Since late September, Chinese authorities have increased their stimulus announcements, resulting in a stock market surge.
• The National People's Congress must approve major increases in government debt and spending, even though the People's Bank of China has already reduced interest rates.
• The legislature's standing committee may grant approval during a weeklong meeting, with more stimulus expected to be unveiled on Friday.

After its parliament concludes on Friday, China is predicted to reveal additional stimulus.

Since late September, authorities have increased stimulus announcements, leading to a stock rally. On Sept. 26, President Xi Jinping held a meeting to boost fiscal and monetary support and halt the real estate market downturn.

The National People's Congress must approve major increases in government debt and spending, even though the People's Bank of China has already reduced interest rates.

The legislature's standing committee may grant approval for the increase in China's deficit to 3.8% during their weeklong meeting, as they did in October of last year when authorities approved a rare increase from 3% according to state media.

After Donald Trump won the U.S. presidential election, expectations for the scale of fiscal support have increased, but some analysts are still cautious and warn that Beijing may remain conservative and not issue direct support to consumers.

At a press conference last month, Minister of Finance Lan Fo'an highlighted the importance of addressing local government debt issues while discussing planned fiscal support.

Officials have reviewed a plan to increase the limit on local governments' debt issuance at the parliamentary meeting, with the additional quota being used to swap out hidden debt, according to state media.

Beijing may allow local authorities to issue an additional 10 trillion yuan in debt over the next few years, according to Nomura's estimate that China has between 50 trillion yuan and 60 trillion yuan ($7 trillion to $8.4 trillion) in hidden debt.

Nomura stated that local governments could save 300 billion yuan annually in interest payments.

The real estate slump in the country has significantly reduced local government revenues and forced regional authorities to spend on Covid-19 controls.

By the end of 2019, the local Chinese government's debt had reached 22% of GDP, which was significantly higher than the revenue growth available to repay that debt, according to an International Monetary Fund report.