Chinese stocks face pressure as fiscal stimulus underwhelms

Chinese stocks are under pressure after a high-profile legislative meeting turned out to be a letdown for investors who had hoped for large-scale stimulus to boost the economy and end a deflationary cycle.

Beijing announced a 10 trillion yuan ($1.4 trillion) program to help local governments tackle their hidden debt on Friday but stopped short of providing new stimulus to bolster consumption. The Nasdaq Golden Dragon China Index tumbled 4.7% in the US following the announcement, likely a reflection of the market’s disappointment.

Investors had pinned their hopes on the Standing Committee meeting of the People’s Congress to offer fresh catalysts for the stock market, especially after Donald Trump’s presidential victory injected fresh uncertainty over tariffs. Chinese data released over the weekend underscored the urgency for more pro-growth efforts, with consumer price growth remaining close to zero and factory-gate prices continuing to fall.

UBS AG lowered its 2025 growth forecast for China following Trump’s election, expecting an “around 4%” expansion for 2025, and a “considerably lower” pace in 2026.

Overseas companies are also pulling their money out of China as the growth outlook turns gloomier. Foreign direct investment slid almost $13 billion in the first nine months of the year, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth.

The CSI 300 Index, a benchmark for onshore shares, fell 1% on Friday as traders grew jittery before the NPC announcement. The gauge rallied nearly 35% from a September low through Oct. 8, but has largely moved sideways since then.