• Analysts at Goldman Sachs raised their growth forecast for China from 4.7% to 4.9% for this year.

• Recent comments from officials suggest a higher debt ceiling and more housing starts by the end of the year.

• Other analysts remain divided and believe that the latest announcements do not provide enough details.

After all, China may not fall too far short of its growth targets this year, Goldman Sachs analysts say.

Analysts have raised their forecast for China’s GDP for 2024 from 4.7% to 4.9% after Beijing officials pledged a new round of stimulus measures. This is just short of Beijing’s target of 5% economic growth.

“China’s latest round of stimulus measures clearly indicates that policymakers have changed their cyclical management policy and focused more on the economy,” the analysts said in a note published on Sunday.

They said their upgrade was largely based on promises to increase public spending made by the Finance Ministry at a much-anticipated press conference on Saturday.

Officials said 2.3 trillion yuan ($15.4 billion) of local government special bond funds will be used in the fourth quarter of this year, suggesting a higher public debt ceiling, or “the highest in in recent years.

Analysts said the announcement indicates “a later fiscal stimulus and a stronger rebound in growth from the third to fourth quarters than expected.”

Goldman analysts also highlighted the importance of fuel for near-term construction starts.

Last week, China’s top economic planning agency, the National Development and Reform Commission, said it would pre-approve 200 billion Chinese yuan ($28.2 billion) worth of projects this year. next by the end of October, presumably to begin construction before the end of the year. .

They said the efforts could help the country’s GDP growth move closer to the “around 5%” target for 2024, which had looked increasingly unlikely for most of this year.

Analysts also revised their growth forecasts for next year upwards from 4.3% to 4.7%. They say that although China’s struggling real estate market will continue to weigh on the economy and export volumes are slowing from its massive growth this year, the latest stimulus step-up still constitutes a larger policy easing than initially planned.

Analysts add that while they have revised their short-term forecasts upwards, they still see significant long-term structural headwinds.

“Although we have improved our cyclical view thanks to more forceful and coordinated Chinese stimulus measures, our structural view of Chinese growth has not changed,” the analysts said.

“The ‘3D’ challenges – demographic deterioration, multi-year deleveraging trend and reduced global supply chain risks – are unlikely to be reversed by the latest round of policy easing,” they added.

China’s recent stimulus measures were aimed at supporting a fragile economy, plagued by a struggling real estate sector and weak domestic demand.

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