China plans further fiscal and monetary easing in 2016

BEIJING – Official announcements from China’s just-concluded Central Economic Work Conference (CEWC), which mapped out an economic blueprint for 2016, highlight a commitment to shore up lacklustre demand. Liquidating excess capacity, especially in the housing sector, will be the key in 2016.

Global asset manager Nataxis said it will not just be housing that receives a boost. Officials are determined to lower corporate costs in 2016. “We believe this means that further policy rate cuts are likely, both through RRR and interest rates. This will put further depreciating pressures on the currency,” Nataxis says.

“Coupled with this, (China) will ease fiscal conditions. Officials will be likely to rely on Government spending and investment to counter the cyclical slump in investment. They could not be more overt with their “aim for more forceful fiscal policy”.

“While we do not expect a stimulus package equivalent to the November 2008 stimulus programme, the announcements do signal a more aggressive fiscal and monetary policy than we have seen in 2015. www.nataxis.com (ATI).