Asian stock markets fell Tuesday as concerns about U.S. economic growth and China lowered its economic growth targets in the face of rising debt and growing challenges posed by Sino-U.S. trade and technology disputes.
As expected, China will reduce its economic growth target to 6.0-6.5% this year and 6.5% last year. The Chinese government has also introduced more incentives, including tax cuts and lower social security contributions, increased infrastructure investment and lending to small and micro enterprises.
The MSCI Mingsheng Asia-Pacific (excluding Japan) index fell 0.5%. Hong Kong's Hang Seng Index. HSI fell 0.6% and Japan's Nikkei Index. N225 fell 0.6%.
Asian stock markets generally weakened, but Chinese government expenditure plans have supported local stock markets. The Shanghai-Shenzhen 300 index. CSI300 rose 0.5% in early trading from its nine-month high hit on Monday, but then retreated to a 0.1% decline.
"With further details of the stimulus measures coming out in the next few days, China's stock market may continue to rise further in the short term," said Wang Shenshen, strategist at the Tokyo Research Center in the East China Sea.
China's Ministry of Finance announced Tuesday that the national fiscal deficit rate rose to 2.8% in 2019 and 2.6% last year.
The government work report also proposed to arrange local government special bonds of 2.15 trillion yuan, an increase of 800 billion yuan over last year.
"Local government bonds have grown considerably," said Naoto Saito, chief researcher at Daiyu Research Institute.
"Since these funds will be dedicated to infrastructure investment, it is inevitable that the government will rely on investment to support the economy in the short term, rather than deleveraging. This may cause problems in the medium and long term.
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