China may raise $1.1 trillion to boost economy, Caixin reports
Sign up now: Get ST's newsletters delivered to your inbox
Residents do their morning shopping at a produce market in Shanghai, on Sept 19.
PHOTO: NYTIMES
Follow topic:
Hong Kong – China may raise six trillion yuan (S$1.1 trillion) from ultra-long special government bonds over three years as part of its efforts to boost the sputtering economy, Chinese media outlet Caixin reported.
The funds will be partly used to help local governments relieve their debt burden, according to the report late on Oct 14, citing unidentified people.
Investors and analysts have been speculating over how much the Chinese government will borrow to fund a fiscal stimulus package. Chinese Finance Minister Lan Fo’an hinted at room for the central government to leverage up on Oct 12 without specifying a headline dollar figure that markets had sought.
Revved-up fiscal spending is still seen as holding the key to sustaining the rebound ignited by the central bank’s stimulus blitz in late September. Traders are betting that the Standing Committee of the National People’s Congress, China’s top legislature, will approve extra budget funding at its meeting later in October.
At the Oct 12 briefing, Mr Lan said there will be a one-off effort to replace local government’s hidden debt, or off-balance-sheet borrowing by companies they control. The programme will be the “largest in recent years”, he said, without providing more specifics.
This measure could be key to resolving risks related to local government financing vehicles, which the International Monetary Fund estimated held over 60 trillion yuan debt as at 2023. Such borrowings are costly to service and add to strains on the local authorities’ finances in the face of falling income from land sales and taxes. BLOOMBERG
