China ready to widen its deficits to support its economy

In the center, Lan Fo’an, the Chinese Minister of Finance, during a press conference in Beijing, October 12, 2024. ADEK BERRY/AFP Determined not to let its economy deteriorate further, the Chinese central government is is said to be ready, Saturday October 12, to “significantly increase” its use of debt to support local authorities, whose coffers are dry, the real estate market and the large banks, which will benefit from recapitalization. “The central government still has enough room to borrow and increase the deficit,” reassured Finance Minister Lan Fo’an at a press conference. This is the third round of announcements from the Chinese authorities in support of the economy in less than three weeks. Since the senior leaders of the Communist Party recognized, on September 24, a few days before the Chinese National Day holiday, the need to “take proactive measures” to help the second largest economy on the planet, state agencies have been taking turns to show what they have to offer. Read also | Article reserved for our subscribers China announces a series of measures to try to revive its economy Add to your selections After the central bank, which lowered its interest rates, and the municipalities, which, one by one, are lifting the measures of restriction that existed on the purchase of an apartment to avoid speculation, it is the turn of the Ministry of Finance to show that it will put its tools at the service of recovery. He announced that he would devote the equivalent of 300 billion euros in bonds to support local governments in the next three months. Cautious consumers The debt ceilings of cities, cantons and provinces will also be raised to allow them to integrate their significant hidden debt – that carried out over the years through external companies so as not to weigh down their books. accounts. A widespread practice at the local level, which has made the level of risk in the Chinese economy illegible. “We will strengthen support for local governments by resolving public debt risks and increasing debt limits on a larger scale,” the minister said. A construction site in Beijing, October 12, 2024. ADEK BERRY/AFP The same local authorities will also be able to issue their own vouchers to buy back plots from developers in difficulty. Other players having suffered from the slowdown, the largest Chinese state banks will benefit from recapitalization, which should contribute to their stability and allow them to help the economy. The figure has not been announced, but according to the Bloomberg agency, the amount could amount to the equivalent of 1,000 billion yuan (129 billion euros). You have 22.51% of this article left to read. The rest is reserved for subscribers.



Source link