The Chinese government is not known for its rapid action. But diminishing GDP growth prospects this year first saw a surprise package of stimulus unveiled in September that included a mortgage rate cut. Then, this month, the country's leadership body, the politburo, announced a shift from a “prudent” fiscal approach to one that is “moderately loose”.
The latter statement from Xi Jinping and his most senior ministers added they would act to “forcefully lift consumption” while a subsequent communication said the government would accept a greater fiscal deficit to do this.
The announcement has set the scene for a more rigorous intervention from government, following on from the previous property and infrastructure-led packages. UK investors immediately saw a boost to the shares of major miners after this shift was unveiled, given state intervention is seen as raising iron ore and steel prices. The share prices of copper miners also bounced, with high volumes of the red metal needed for housing completions and infrastructure projects.