China says it will 'significantly expand' credit to revive economic growth By Reuters
By Kevin Yao and Joe Cash
BEIJING (Reuters) – China said on Saturday it would “significantly increase” government debt issuance to provide subsidies to low-income earners, support the housing market and replenish state-owned banks as it tries to revive sluggish economic growth.
Without immediately providing specific figures, Finance Minister Lan Foan told a press conference that the central government has enough room to issue more debt and that there will be more “counter-cyclical measures” this year.
China's economic stimulus measures have been the subject of much speculation in global financial markets after a September meeting of the Communist Party's top leaders, the Politburo, showed a growing sense of urgency about rising economic conditions.
Chinese shares hit a two-year high, rising 25% in the days since that meeting, before retreating as tensions mounted in the absence of more details about the government's spending plans.
Reuters reported last month that China plans to issue special bonds worth about 2 trillion yuan ($284.43 billion) this year as part of its fiscal stimulus.
Part of that will be used to help local governments deal with their debt problems, while the other part will finance the purchase of household goods and other goods and finance a monthly allowance of about 800 yuan, or $114, per child in all two-house households. or many children.
Separately, Bloomberg News reported that China is considering injecting up to 1 trillion yuan into its biggest banks to boost their ability to support the economy, primarily by issuing new sovereign bonds.
Issuance of additional debt in China is often subject to official approval by its rubber-stamp parliament.
The central bank in late September announced the most aggressive measures to support the economy since the outbreak of the COVID-19 pandemic, including a number of measures to help pull the real estate sector out of a multi-year slump, including a reduction in mortgage rates.
However, while the measures have boosted Chinese stock prices, many analysts say Beijing also needs to firmly address more entrenched structural problems such as rising consumption and an overreliance on debt-fueled infrastructure investment.
