China’s central government has urged local authorities to provide financial aid to people facing high living costs, particularly in the lead-up to the New Year and Lunar New Year festivals. Municipalities that can afford it are encouraged to offer subsidies, temporarily reduce prices, and link social assistance to price levels, according to the Ministry of Civil Affairs.
This initiative is part of broader efforts to stimulate private consumption, which is seen as key to revitalizing the economy. With potential U.S. tariffs looming, China is also shifting its policy focus toward boosting consumption and increasing public spending in 2025.
While cash subsidies during festivals like Lunar New Year are common, the government took the unusual step of distributing funds ahead of the October 1 National Day Holiday to encourage private spending.
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At the margin this should be a tailwind for ‘China proxy’ trades such as AUD, and also for China stocks.
The hapless AUD has been pummeled against the strong US dollar.