The stimulus package is designed to stabilise the country’s wobbly property market, shore up its banks and inject confidence into the consumer sector. The broader measures include higher-than-expected monetary easing, comprising interest rate cuts and a reduction in the reserve requirement ratio (which should encourage banks to lend). 

The troubled real estate sector has also seen significant intervention. This includes a 0.5% cut in mortgage rates for existing loans. This should not only stimulate the property market, but also give households a little more to spend. IIn its latest CIO Flash, DWS estimates this could translate to 2.5% more annual disposable income for eligible households. The government may also make additional direct payments to consumers to get boost spending, alongside targeted social spending. 

These policies may be extended, but even in their current form they are a statement of intent from the Government. They show clear determination to get the economy back to a run rate of 5% growth. However, they are not a panacea. DWS says: “While the newly announced stimulus measures present a multifaceted approach to revitalise the economy, their success will depend on timely and effective implementation, alongside addressing the existing structural challenges within the housing market and broader economic landscape.”

Equally, it also doesn’t get rid of all the geopolitical problems surrounding China. A Trump presidency in the US could bring about onerous tariffs, laser-targeted on China. He is threatening 60% tariffs on Chinese imports. Even under a Harris presidency, tariffs are likely to remain in place. 

China has been holding military exercises around Taiwan, designed to warn the country against seeking independence. The moves are likely to aggravate Taiwan and antagonise foreign powers, who are committed to Taiwanese self-determination. The manoeuvres remain in a grey zone, but emphasise the fragility of the region. 

These are considerations for the longer-term. In the meantime, investors can enjoy a recovery in the Chinese market from very low levels, even if share prices have been wobblier over the past week.  China is complex, and investors need to be prepared for a wild ride.