Graphics: China's incremental stimulus stabilizes economy

China's economic fundamentals have shown a significant recovery, with the main economic indicators in fields such as real estate, consumption, investment and industrial output bouncing back since the country implemented a new round of incremental policies to boost market confidence and expectations in late September.

The new package of incremental stimulus focus on five key areas: intensifying macroeconomic counter-cyclical adjustments, increasing effective domestic demand, increasing support for enterprises, stabilizing the real estate market and boosting the capital market.

China has implemented proactive fiscal policies to strengthen support for the country's major strategic tasks and people's livelihood. It has issued 1 trillion yuan (around $138 billion) of super-long-term special government bonds, and increased the local government special debt limit to 3.9 trillion yuan.

In the first 10 months, the national general public budget expenditure was 22.15 trillion yuan, an increase of 2.7 percent year on year. Expenditure in key areas has been expanded, including urban and rural communities, social security and employment, science and technology, and education. 

China has intensified efforts to spur social investment and consumption in its bid to bolster domestic demand. Retail sales began to rebound in September. Sales of new energy passenger vehicles surged 51 percent, while sales of household appliances and audio-visual equipment climbed 20.5 percent, thanks to a new trade-in policy. Retail sales further increased by 4.8 percent in October, the highest growth rate since February.

The growth rate of fixed-asset investment stabilized for the first time in September after declining for several consecutive months. The growth rate of infrastructure investment jumped from 4.1 percent to 4.3 percent in October, the first rebound since March. The growth rate of manufacturing investment bottomed out in August and bounced back to 9.3 percent in October.

The manufacturing Purchasing Managers' Index (PMI) stopped falling in September, reversing a downward trend since March. In October, it returned to 50.1 percent, above the 50-mark for the first time in half a year. A reading above 50 represents an economic expansion.

Industrial output measures the activity of enterprises, each with an annual main business turnover of at least 20 million yuan. The growth rate of industrial output in September rebounded after four months of decline.

The month-on-month change in second-hand home prices in first-tier cities achieved positive growth in October for the first time since September 2023, among which, second-hand home prices in Beijing, Shanghai and Shenzhen increased 1 percent, 0.2 percent and 0.7 percent respectively.

There is also a significant recovery trend in the capital market. In October, the total turnover and total volume of shares traded in the Shanghai and Shenzhen stock exchanges increased by about 1.5 times, the largest growth rate this year. Driven by strong policies, market sentiment is high.