Nomura China: New Policy Package Keeps Landing, but the Scale Is Limited
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China's Ministry of Finance will let local governments deploy RMB550bn of existing bond quotas to support Q4 spending and investment, a package Nomura judges helpful but limited. Unlike quotas in 2024 and 2025 that went mainly toward resolving hidden debt, this amount is earmarked entirely for incremental fiscal outlays: RMB300bn of general bonds for county-level spending after a marked slowdown in expenditure growth, and RMB250bn of special bonds for regions with project funding needs, prioritizing 'six networks' projects.
The measures follow the State Council's September 28 signal and only partially offset the fiscal contraction of the past half year, in Nomura's view; deeper structural reform and debt cleanup remain necessary. Nomura estimates roughly RMB1.25trn of unused local government bond quota remained at end-2025, leaving RMB700bn after this use, while the 2026 annual government bond net financing quota rises from RMB14.36trn to RMB14.44trn. Nomura keeps its Q4 2026 GDP growth forecast at 4.5% y/y and expects around RMB4.0trn of Q4 government bond net financing.
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