China's state plan lays out more measures to boost the economy but there are no new plans for major stimulus

Cheng Shanjie, head of China's National Development and Reform Commission, on Tuesday pledged a raft of measures to boost the country's economy during a long-awaited press conference.

But he stopped short of announcing any major new stimulus plans, frustrating investors and dampening the rally in mainland Chinese markets.

A senior official with the National Development and Reform Commission said China will accelerate the issuance of special purpose bonds to local governments to support regional economic growth.

Cheng said that special long-term sovereign bonds, totaling 1 trillion yuan, have been fully deployed to finance domestic projects, and pledged that China would continue to issue special long-term treasury bonds next year.

A senior official added that the central government will release a 100 billion yuan investment plan for next year by the end of this month, ahead of schedule.

The head of the National Development and Reform Commission was speaking at a press conference with four other key officials at the country's economic planning agency. The briefing came as markets in mainland China returned from Golden Week, a week-long holiday that began on September 30.

The rally in the Chinese market lost momentum as policymakers were reluctant to introduce further stimulus measures. The blue-chip CSI 300 index pared gains to a 5% rise, after rising more than 10% at the open. Likewise, the Shanghai Composite Index and the SZSE Composite Index trimmed their gains to around 5% and 8%, respectively.

Cheng said China is “quite confident” in achieving the full-year economic growth target this year, while pledging to take some measures to support the real estate market and boost domestic spending.

“The absence of specific numbers may not be a negative sign,” Yu Su, chief economist at the Economist Intelligence Unit, said in a note. China's pro-growth stance remains unchanged.

The economist kept her growth forecast for China unchanged at 4.7% this year and 4.8% in 2025, while she expected that Beijing would be able to arrange another trillion to 3 trillion yuan in additional financial support to boost the real economy.

“Many Western investors will take profits off the table today and wait to see if more money comes in,” Sean Ren, partner and managing director at China Market Research Group, told CNBC. They were frothy as they hoped the government would launch a massive stimulus package.

“If there is no fiscal stimulus with real detail and details, the rally will fade away,” he added.

Last month, China's top leaders signaled a sense of urgency in the face of a long and painful economic downturn that has cast doubt on the country's ability to meet its annual growth target of “about 5%.”

Before the holiday, Chinese authorities called for enhanced fiscal and monetary policy support at the monthly meeting of senior Communist Party officials, and unveiled a series of stimulus measures aimed at putting an end to the decline in property prices.

The stimulus campaign came as growth slowed in the world's second-largest economy after a disappointing recovery from the coronavirus lockdowns, under the weight of weak domestic demand and a prolonged real estate downturn.

In the first half of the year, China's economy grew by 5.0% compared to the previous year, meeting the central government's target, while in the April-June quarter, GDP growth missed expectations and grew by 4.7%, marking its slowest growth since 2018. Q1 From 2023.

China's latest CPI rose 0.6% year-on-year in August, missing expectations of 0.7%, while the core CPI, which excludes food and energy prices, rose 0.3%, a slower rise for the second month in a row.

Among a barrage of disappointing economic data, factory activity in China also contracted for the fifth straight month in September, with the official PMI reaching 49.8 in September. A PMI reading above 50 indicates expansion in activity, while a reading below this level indicates contraction.

The Caixin PMI reached 49.3 in the same period, the biggest contraction in 14 months, driven by falling demand and a weak labor market.

In March, Cheng said at a high-level press conference that China “will continue to strengthen macroeconomic policies.” This will include coordination of fiscal, monetary, employment, industrial and regional policies, he added, as China continues to promote macroeconomic policy adjustment.

The NDRC chairman also admitted that “there are still many difficulties and problems” in the process of achieving the country's expected growth goals, according to a CNBC translation of his Mandarin remarks.

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