[MARKET ANALYSIS] China unveiled measures to boost country-level consumption; policymakers await further data before enacting stronger measures

TLDR: China has unveiled measures aimed at boosting consumption across lower-tier cities and countries, with fiscal support a key focus. A move which comes after a string of poor Chinese data, with the recent release of Industrial Production (4.5% vs exp. 5%) and Retail Sales 0.6% (exp. 1.5%, prev. 1%) missing expectations. APAC stocks were broadly lower in overnight trade, but with Chinese indices cushioned by the announcement. Nonetheless, the Shanghai Composite (-0.2%) and Hang Seng (-0.4%) posted modest losses. Focus now turns to whether China opts to deliver wide-scale effort to boost demand within the region, with particular attention on the next economic Politburo meeting in September. Measures: The plan itself involves China rolling out 18 measures to boost spending, covering retail infrastructure, business formats, product and service supply, distribution networks and financial support. From the fiscal side of things, the measures will help improve access to personal consumption loans and service-sector business loans. Moreover, businesses will be able to qualify for interest subsidies as part of government-backed plans. The Ministry said that the measures aim to "create a favourable environment for invigorating lower-tier markets" and "help build a robust domestic market." Weak data / Commentary: A string of weak Chinese data has led to increased expectations of stimulus from policymakers. Chinese GDP printed at 4.3% for Q2, beneath expectations of 5%, and more importantly, below China’s target of 4.5-5%. July’s activity data (mentioned above) has also boosted calls for fresh stimulus; TD Securities, following the release, wrote that it “increases the urgency for policymakers to heed President Xi's call for stronger counter-cyclical adjustments from the July Politburo meeting”. Analysts at the firm believe China could announce fresh stimulus at the September Politburo meeting, if economic momentum continues to wane. Analysts at Pantheon Macro opine that policy support measures will likely be increased in late September/October, should domestic growth remain sluggish. Whilst the firm believes it is unlikely that a broad policy rate cut will be delivered, it sees the chance of additional government bond quota and property support measures.