China said on Tuesday it was "fully confident" that it would achieve its annual growth target but stopped short of unveiling more aggressive fiscal measures, leaving investors disappointed as they had hoped for additional support from policymakers to help revitalize the economy.
China shares rallied in early trade to two-year highs after the long National Day holiday but quickly lost steam after the state planner did not provide details to sustain market optimism. Hong Kong shares slumped as investors also walked back some of the stimulus excitement.
National Development and Reform Commission Chair Zheng Shanjie told a news conference the government planned to issue 200 billion yuan ($28.3 billion) in advance budget spending and investment projects from next year.
The country will also quicken fiscal spending, and "all sides should keep making efforts more forcefully" to strengthen macroeconomic policies, he added.
"The international market is volatile, global trade protectionism has intensified, and uncertain and unstable factors have increased. These will have an adverse impact on my country through trade, investment, finance and other channels," Zheng said.
Investors and economists say more policy support is needed on the fiscal side to sustain the market's optimism, likely to be issued by the Finance Ministry.
"So far, the NDRC press conference appears to run short on details with regard to stimulus measures. Hopes were raised, but the delivery was disappointing," said Christopher Wong, currency strategist at OCBC.
"Post-opening rally in Chinese equities has fizzled out, and the lack of follow-through is a setback to sentiments."
In an effort to reverse the economic downturn, China unveiled before the week-long Golden Week holiday its most aggressive monetary stimulus package since the COVID-19 pandemic, coupled with extensive property market support.
Premier Li Qiang on Tuesday urged all government departments to support growth and improve policy coordination during a special study session on economic policy held by the cabinet, according to state television.
Separately, state television quoted Li as saying China would unveil specific plans for policies that are being studied, and consider reserve policies for next year.
Analysts said it would take time to restore consumer and business confidence and get the economy back on more solid footing. A housing market recovery, in particular, could be a long slog.
"We anticipate that the government will arrange 1-3 trillion yuan of additional fiscal support this year and next to boost the real economy, recapitalize banks, and stabilize the property market," said Yue Su, principal China economist at the Economist Intelligence Unit (EIU).
"This, along with investments from special long-term bonds planned for next year, is expected to primarily impact 2025's economic growth."
EIU retains its economic forecast of 4.7% growth for this year and 4.8% growth in 2025, Su said.
The government set a growth target of around 5% this year, but economic indicators showed growth momentum waned since the second quarter, weighing on household spending and business sentiment amid a severe property downturn.
A private report by recruiting platform Zhaopin showed on Tuesday that the average pay offered by recruiters in China's 38 major cities fell 2.5% in the third quarter from the second and down 0.6% from a year earlier.
To address insufficient domestic demand, Zheng told reporters that policymakers would focus on enhancing people's livelihood to stimulate consumption and investment, such as supporting disadvantaged people, consumer goods trade-ins, elderly care, and births. No further details were announced.
Vice Chairman of the NDRC, Liu Sushe, stated that most of the 6 trillion yuan in government investment this year was allocated to specific projects, with 90% of local government special bonds used for project construction issued by September.
The government has issued 1 trillion yuan of ultra-long-term special bonds planned for this year to fund major projects, and more such bonds will be issued next year, Zheng said, without giving further details.
At the same press conference, another vice chairman of the NDRC, Zhao Chenxin, said that China's economic growth remained "generally stable" over the first three quarters.
