Chinese president Xi Jinping is reportedly planning to launch a desperate £200bn project in a bid to save his country’s economy from meltdown.
The move comes after Chinese premier Li Qiang demanded authorities bring in “forceful” measures to control the economy after the Chinese stock market slumped to a five-year low.
China’s CSI 300 Index has lost a fifth of its value over the last nine months reaching its lowest level since the start of 2019 this week, with the NASDAQ Golden Dragon China Index also falling for a sixth day in a row.
Low investor confidence began in 2021, when property giant Evergrande collapsed.
Bloomberg reports that Li held a meeting with the Chinese cabinet on Monday to boost the investment value of listed companies.
After the meeting, China’s State Council said it needed to improve macro policy in order to boost the country’s economic recovery from the Covid pandemic.
The country’s stock market saw an initial jump when restrictions were lifted but the bounce was not maintained.
Last year China’s £1trillion sovereign wealth fund bought in exchange-traded funds (ETFs) and bank shares in a bid to boost the market.
Another £81bn was also injected into the country’s financial system by the People’s Bank of China.
Michael Hirson, an economist at 22V Research, told Bloomberg that China’s problems are deep-rooted.
He said: “The biggest challenge that equity markets face is macroeconomic rather than technical.
“In an environment of weak private sector demand and prolonged deflation, it is hard to excite investors about the outlook for Chinese companies to grow revenue and profits.”
China is also facing a demographic crisis as its birth rate plummets and working-age population shrinks.
The country’s population dropped by two million last year and more than a fifth of its population is now aged 60 or over.
