Beijing announced on Sunday that it would spend Rmb 4,000bn ($586bn, €458bn, £373bn) – an amount equivalent to 15 per cent of gross domestic product – on infrastructure and social welfare over the next two years to prevent the economy from slowing too rapidly.
The authorities had been expected to unveil new fiscal measures later in the month after a summit of economic policymakers in Beijing. However, the announcement appears to have been hastily pushed forward.
Anecdotal evidence from a range of different companies in China suggests that the economy slowed sharply in October and some economists had downgraded next year's growth estimate to 5-6 per cent in the absence of strong fiscal action. Economists say the government wanted to deliver a strong signal about its spending plans before the official October data were released.