China Macro: From Pre-Holiday Mini-Stimulus to Post-Golden Week Fiscal Measures - Deployment Is Key (Citi)
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China rolled out further incremental support after the Golden Week, with the Ministry of Finance confirming the recycling of RMB550 billion in unused local government special bond (LGB) quotas. The measures follow holiday data showing per-capita tourism spending at a four-year low, underscoring weak domestic demand. Citi expects investment-driven cyclical stabilization by year-end if infrastructure construction picks up before winter, and views the year-end Politburo meeting and Central Economic Work Conference (CEWC) as the earliest windows for new policy signals.
Policies introduced on 29 September included a PSL rate cut—though policy banks were still repaying PSL in September, limiting the boost—and a nationwide mortgage interest subsidy for qualifying homes (under 120 square meters and RMB1.5 million). The government may face pressure to defend 4% growth next year, and Citi sees a high probability of a 9.24-style policy pivot in 2027.
On currency, the PBOC insists the market plays a decisive role in exchange-rate formation and rejects quantitative assessments that the renminbi is undervalued. Yet with record yield spreads and the renminbi's rising use as a low-cost funding currency, Citi is increasingly cautious about depreciation risk, while viewing a one-off large revaluation as highly unlikely. The report does not recommend individual stocks.
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