The spate of stimulus measures, described as a shotgun approach rather than the bazooka the market has been waiting for more than a year, comes as China’s economy has been mired in a painful property bust, growth is sputtering, and deflationary pressures are mounting.

The moves, with policymakers vowing more, gave markets a boost. Investors reasoned that Beijing wasn’t going to sit on its hands as the economy veered into what analysts see as recession territory with growth of 4%. That would leave it short of the official 5% growth target for the year.

The iShares MSCI China

MCHI

+8.96%

exchange-traded fund was up 9% in afternoon trading at $47.09. It is down about 40% from its most recent record high in March 2021.

Among the measures were interest-rate cuts by the People’s Bank of China to spur borrowing, plus a reduction in the amount of reserves banks must hold relative to their assets—a step that will allow them to lend more.

But the most notable initiative was a plan to reduce the rate on existing mortgages by half a percentage point. While details weren’t announced, this would be the biggest help to consumers, who have hunkered down amid job losses and continued pain in the property market, which holds the bulk of their wealth. The hope is that households will spend the extra money, rather than sock it away in savings.

The central bank also increased the share of loans it would cover to fund local governments’ purchases of unsold real estate inventory to 100% from 60%, the latest attempt to deal with the property glut.

And it also floated new ways to create a floor for stocks: Policymakers set up a 500 billion renminbi ($71 billion) swaps facility that insurers, asset managers, and securities firms can to tap to buy stocks or bonds.

It also created a 300 billion renminbi fund that companies can tap to buy back stock. Share repurchases are one of the few bright spots investors have seen in the market in recent years, with companies like Alibaba Group Holding

9988

-0.76%

and Midea Group

000333

+3.04%

using large buybacks to lend strength to their stocks.

But for any move to be sustainable, analysts cautioned, more is needed to address the country’s numerous structural challenges. Domestic demand is anemic and the local-government sector is deeply indebted. Aggressive investment in manufacturing to export cheap goods is fueling both deflation at home and a backlash from the rest of the world: The U.S., Europe, and others are responding with trade restrictions.

In any case, much of what was announced was iterations or expansions on policies Beijing has already tried but that have done little to convince households to buy property or borrow money.

Whereas markets anticipated the Federal Reserve’s bigger-than-anticipated rate cut last week as a positive sign about progress in the bank’s fight against inflation, China’s move feeds a bearish view about the economy. “It’s a sign that the authorities are seeing bigger deterioration in growth than investors have yet anticipated,” TS Lombard Chief Economist Freya Beamish told Barron’s. “And the authorities have not yet done enough.”

If there is some good news, it is that at least for now, the stimulus effort should keep China’s slowdown from spoiling the outlook for the global economy and ruining the soft landing expected in the U.S.

“Looks like Beijing is doing enough to prop up short-term growth – especially if they come up with more fiscal support which seems likely – so that China isn’t going to drag down the global economy this year at least,” Duncan Wrigley, chief China economist at Pantheon Macro, told Barron’s. “But it isn’t out of the woods by any means.”

The news has given Chinese stocks, one of the cheapest parts of the global market, some life. But investors have been burned several times before as policy moves haven’t succeeded in addressing the lack of confidence among the public.

And plenty of problems remain. China risks a new trade war and 60% tariffs if Donald Trump is re-elected as president, while geopolitical wrangling continues as the Biden administration keeps tightening restrictions on China. China’s own retaliation, including increased restrictions on U.S. companies and a clamping down on dissent, is a danger as well to the extent that it hampers economic growth and raises doubts about government policies.

Write to Reshma Kapadia at reshma.kapadia@barrons.com