China readies stimulus measures as local virus cases reduce

China plans stronger steps to revive an economy hit by coronavirus, as the nation on Saturday reported no new locally transmitted infections for the previous day.

The ruling Communist Party’s Politburo said on Friday it would step up macroeconomic policy adjustments and pursue more proactive fiscal policy, state media reported.

With the world’s second-biggest economy expected to shrink for the first time in four decades this quarter, China is set to unleash hundreds of billions of dollars in stimulus.

The Politburo called for expanding the budget deficit, issuing more local and national bonds, guiding interest rates lower, delaying loan repayments, reducing supply-chain bottlenecks and boosting consumption.

“We expect government ministries to roll out more tangible measures in the coming weeks as this Politburo meeting gave them no choice but to do more,” Goldman Sachs analysts said.

The Politburo did not elaborate on plans for the central government to issue special treasury bonds, which would be the first such issuance since 2007. China should issue at least $282 billion of such bonds to aid the economy, Morgan Stanley Chief China Economist Robin Xing said.

Restrictions on foreigners entering the country went into effect on Saturday, as China reported no new locally transmitted infections and a small drop in so-called imported cases.