China Looks To Huge Stimulus Package To Prop Up Ai

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The Chinese stock market has had a precipitous drop since the start of 2024 as the economy fails to recover to pre-COVID-19 pandemic levels, prompting a possible government stimulus, according to Bloomberg.

The Chinese Communist Party is considering mobilizing the equivalent of $278 billion from offshore state-owned enterprises to buy shares in the country’s rapidly declining stock market, according to Bloomberg. Proposals for stimulus come as the country’s CSI 300 Index hit a five-year low due to a limping economy plagued by a debt-laden real estate sector, leading to a massive outflow of foreign capital.

“The potential support package should be able to stem declines in the short term and stabilize markets into the Lunar New Year, but state buying alone has historically had limited success in turning around market sentiment if not followed up by further measures,” Marvin Chen, strategist at Bloomberg Intelligence, told the outlet.

China’s top index, the CSI 300, peaked at the beginning of 2021 at around 5750 points, but has since had a semi-steady decline to well below 3500, according to Bloomberg. The drop from 2021 has resulted in $6 trillion in lost capital.

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