China to increase debt issuance in bid to revive economy
ADEK BERRY / AFP
- China plans to increase debt issuance to boost its economy.
- It announced plans for a new fiscal stimulus package on Saturday.
- The size of the package remains unclear.
China has announced plans to ramp up government debt issuance in a bid to boost its economy.
In a press briefing in Beijing on Saturday, China's minister of finance Lan Fo'an outlined a new package of fiscal policy measures designed to help local governments tackle debt problems, spur the property market, and replenish banks' capital.
"We will increase support for local governments in resolving government debt risks, increase debt limits on a larger scale, and support local governments in resolving hidden debts," he said.
Fo'an, who did not specify the size of the stimulus package, added that there was "considerable room" to issue debt and called the measures "counter-cyclical."
China slipped into deflation in 2023 as a result of weak domestic demand and a struggling property market.
Chinese equities rallied in September on the back of a series of easing measures announced by Beijing aimed at stimulating growth.
JPMorgan's Asia Investment Strategy team said that those measures indicated "a greater sense of urgency to pull the economy out of deflation and restore confidence among consumers and private sector businesses."
But Chinese stocks plunged ahead of Saturday's meeting as questions grew over the government's plans. The benchmark CSI 300 fell 7.1% on Wednesday — its biggest one-day fall since 2020.
The lack of specific details on the size of the new stimulus package will hence leave investors wanting.
"The strength of the announced fiscal stimulus plan is weaker than expected. There's no timetable, no amount, no details of how the money will be spent," Huang Yan, an investment manager at Shanghai QiuYang Capital Co, told Reuters.