TMTPost -- China ‘s Ministry of Finance will hold a press conference on Saturday, stirring speculation of fresh stimulus as the government vows to ramp up efforts to bolster the world’s second largest economy.

Credit：Xinhua News Agency

Chinese Minister of Finance Lan Fo’an will outline how the government agency will “intensify counter-cyclical adjustment in fiscal policy to promote high-quality economic development" and answer questions from reporters, the State Council Information Office (SCIO) said in a notice Wednesday.

The press conference became more highly anticipated as the National Development and Reform Commission (NDRC), China’s top economic planner, didn't release any new stimulus at a news conference held by the SCIO Tuesday, which disappointed investors who anticipated a raft of stimulus package following a week-long National Day holiday in China.

Analysts at Hua Chuang Securities Co., Ltd. believes it is supposed to focus on Minister Lan’s remarks about the intensity of fiscal policy and expansion of domestic demand since the news conference Tuesday sent signals of "more incremental policies to be expected". The analysts didn’t rule out issuance of additional special bonds in the coming three months. On the investment front, it is notable that new investments in so-called “dual important projects”--major national strategies and security capability, and those regarding so-called “two upgrades”- large-scale equipment upgrades and trade-in of consumer goods.

The Ministry of Finance is likely to issue additional treasury bonds by the end of the year considering highlights of economic stability and ensuring necessary fiscal spending following a meeting of the Politburo, China’s top decision-making body, late September, according to analysts led by Zhou Junzhi of macroeconomic of CSC Financial Co., Ltd. “If the scale of upcoming additional bonds is within RMB3 trillion, we see it will not increase the fiscal expenditures, but only meet the fiscal spending target set in the budget at the beginning of the year. Therefore, RMB3 trillion can be an threshold for us to evaluate whether there is incremental fiscal spending in the future,” the analysts wrote in a note Wednesday.

“It’s quite unlikely that the fiscal headline number is going to be huge,” said Jiang Liangqing, managing director at Zhuhai Greenbamboo Private Fund Management, citing the risks of debt-fueled spending binges. “There’s a ceiling to how strong fiscal measures can be before they bring an adverse effect.”

China’s central government will allocate a total of RMB200 billion (US$28 billion) which are originally in next year’s plan to local governments later this year, including a RMB100 billion investment plan from the central government’s budget and another RMB 100 billion for projects to fund so-called “dual important projects”--major national strategies and security capability, said Zheng Shanjie, head of the NDRC, at Tuesday’s news conference. Earlier release of these investment projects will support local governments in accelerating the preliminary work and construction, Zheng told reporters.

A certain proportion of these projects will involve urban renewal, mainly in the construction of pipelines for gas, water, sewage and heating, which is expected to generate investment demand of around RMB4 trillion in the coming five years, said NDRC deputy head Liu Sushe at the same press conference.

As part of efforts on the investment front, ultra-long special treasury bonds will continue to be issued next year with optimized investment areas to implement major national strategies and build up security capacity in key areas, Zheng noted. China has planned 1 trillion-yuan issuance of ultra-long special treasury bonds this year to support dual important projects. NDRC deputy chairman Liu also urged local governments to complete the issuance of the remaining RMB290 billion of local special bonds by the end of this month.