China’s central government still has “considerable room” to issue debt and increase its deficit, and will continue to study possible counter-cyclical measures, the Asian country’s Finance Minister Lan Fo’ said today. year.
Lan wanted like this allay the fears of many analysts and investorswhich precisely highlighted debt sustainability as a possible brake on the increase in public spending to reactivate the growth of the second largest economy in the world, which was not what was expected after the end of the “zero covid” years.
THE tax collection this year will be lower than forecast, but the system shows sufficient “resistance” to balance income and expensesdeclared the minister during an expected press conference, during which he however did not provide precise figures on the tax incentives.
According to economists interviewed by Bloomberg, the authorities should promise up to about 2 trillion yuan ($283,038 million, €258,512 million) in new fiscal stimulus measures.
At the event, Lan put forward other initiatives to address key problems in China’s economy, such as the “hidden” debt of local and regional governments – more than $9 trillion accumulated through debt channels. informal financing called LGFV – or a prolonged real estate crisis it doesn’t seem to hit rock bottom.
Regarding this first question, Plans to raise debt ceiling “on a relatively large scale” exceptionally, with the aim of exchanging these hidden liabilities and thus helping local administrations reduce their debt risks, a plan the details of which will be known once the respective legal procedures have been resolved.
Lan said that in the last three months of the year, the country’s regions will still benefit from some 2.3 trillion yuan (325.493 million dollars, 297.289 million euros) in special bonuses to accelerate the progress of projects.
About the real estate crisisVice Minister Liao Min said bonds would be issued at the local government level to “stop the fall in the real estate market and stabilize it”.
These bonds can be used to purchase unused land from struggling developers or unsold properties, with the goal of converting them into affordable housing, a plan that originally called for construction but will now focus more on “digest” the houses already built which have not found a buyer, to balance supply and demand.
Likewise, Liao announced that Finance was studying the possibility of remove VAT on residential properties.
Ministry officials also indicated that the “tier 1” capital replenishment program – basic own resources – for the main state banks has already started, and they argued that a set of reform measures in tax and fiscal matters.
In recent weeks, faced with an unflattering situation and economic data less good than expected, the Chinese authorities took the initiative by announcing a series of stimulus measures aimed at stimulating consumptionstop the real estate crisis or provide support to the country’s stock markets.
