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China's central bank has maintained its medium-term lending rate at 2.0% to stabilize the yuan amid pressures following the U.S. presidential election. The People's Bank of China aims for gradual policy adjustments, with expectations of potential reserve requirement ratio cuts and a cautious approach to interest rate changes as it navigates economic challenges. The offshore yuan has depreciated over 3% since late September, prompting discussions on balancing economic revitalization with exchange rate stability.
China is poised to implement a significant spending package to support its economy, with UBS predicting an expanded fiscal deficit of 2% of GDP in 2025, amounting to over 2 trillion yuan ($276 billion). Wang Tao, chief China economist at UBS, indicated that the government has the capacity for bolder actions, including income and consumption subsidies, potentially announced during the National People's Congress in March.
The 22nd Greater China Conference, themed "A New Horizon: People, Planet, Prosperity," attracted over 3,800 attendees, including 2,500 investors and 278 companies. Key discussions centered on China's economic growth drivers, common prosperity, and sustainable finance, featuring insights from prominent figures like Ray Dalio and Professor Daniel Kahneman. The event highlighted the importance of digital transformation, new energy, and regulatory reforms in shaping China's future.
UBS anticipates a strong rebound in China's economic momentum for Q4, driven by significant fiscal support. With retail sales and production improving in October, GDP growth is projected to exceed 6% quarter-on-quarter, potentially lifting annual growth close to 5%. Additional policy measures are expected to bolster growth into 2025 amid challenges like a property slowdown and US tariff uncertainties.

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