The highest parliamentary body of China approved a 1 trillion yuan ($137 billion) sovereign bond issue and authorized a bill to allow local governments to advance part of their debt quotas. bonuses 2024, state media reported on Tuesday, in a measure to support the economy.
Funds raised from the new sovereign bonds will support the reconstruction of disaster-hit areas in the country and improve urban drainage prevention infrastructure to boost China’s ability to withstand natural disasters, state news agency Xinhua said.
This will widen the country’s budget deficit in 2023 to around 3.8% of gross domestic product, from 3% previously set, Xinhua said.
The Chinese Parliament was about to approve just over 1 trillion yuan in additional sovereign debt issuances.
The approval of the bill by the Standing Committee of the National People’s Congress (NPC) came at the conclusion of a five-day meeting.
“The additional fiscal support approved today is the intervention that we expected and that was necessary to avoid a sudden fiscal tightening in China in the last weeks of the year,” said Mark Williams, chief Asia economist at Capital Economics. “Fiscal policy has been a prop for expansion in China in recent quarters. These new measures will maintain their support, but will not provide an additional boost.”
The world’s second-largest economy grew faster than expected in the third quarter, improving the chances that Beijing can meet its growth target of around 5% by 2023.
But economists say the persistent drag on the housing sector continues to weigh on the economic outlook.
“It is not usual for the central government’s fiscal plans to be reviewed outside the usual budget cycle, so this measure indicates a clear concern about short-term growth”Williams said.
China has previously allowed local governments to issue bonds ahead of the annual session of parliament, which approves the government’s budget plans and is usually held in March.
Local governments had been told to complete the issuance of the 2023 quota of 3.8 trillion yuan in special local bonds by September to finance infrastructure projects.
The Government has not revealed the amount of the anticipated bond installments of local administrations for 2024.
Source: Reuters
Source: Gestion
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