China's finance ministry on October 12 unveiled a fiscal stimulus package aimed at reviving the flagging economy and achieving the government's growth target, though it did not disclose the size of the new measures, Report informs via Reuters.
The ministry said at a press conference that it would "significantly" increase government debt issuance to provide subsidies to low-income households, support the property market, and replenish state banks' capital as part of efforts to jumpstart economic growth.
The much-anticipated briefing comes after the central bank and other regulators in late September announced the most aggressive monetary stimulus measures since COVID-19, including steps to revive the ailing property market such as mortgage rate cuts.
China will increase support for local governments to address hidden debt risks, enhancing their capacity to support the economy. The government has allocated 1.2 trillion yuan ($169.81 billion) in local bond quotas this year to help resolve existing hidden debts and settle government arrears to firms.
China plans a large-scale debt swap program, alongside continued use of bond quotas for debt resolution, described as the "biggest" policy measure in recent years. Detailed policies will be announced after the necessary legal procedures are completed.
China will expand the use of local government bond proceeds to support the property market and recapitalize large state-owned banks. Special treasury bonds will be issued to bolster the core Tier-1 capital of major state-owned commercial banks, improving their ability to withstand risks and provide credit to the real economy.
Local governments will be allowed to use special bonds to purchase unused land, enhancing their ability to manage land supply and alleviating liquidity and debt pressures on both local governments and property developers.
China will also support the purchase of existing commercial housing for use as affordable housing and continue funding affordable housing projects.
The government is studying policies on value-added taxes that are linked to residential properties, and is looking at other tax policies to support the property market.
The government will increase support for low-income individuals and students to boost consumption. The number of national scholarships for undergraduates will be doubled from 60,000 to 120,000 annually, with the value of each scholarship rising from 8,000 yuan to 10,000 yuan per student per year.
Lan also noted that the central government has "relatively large room" to raise debt and increase the budget deficit, though he did not provide details.
China has set this year's budget deficit at 3% of GDP, down from a revised 3.8% last year. The issuance of 1 trillion yuan in special ultra-long treasury bonds this year is not included in the budget. Local governments will issue 3.9 trillion yuan in special bonds in 2024, compared to 3.8 trillion yuan last year.