ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Politics

China to make new fiscal push to fight coronavirus slowdown

Leadership eyes higher deficit ratio and first special bond issuance in 13 years

The Lujiazui financial district in Shanghai. China plans even more fiscal spending to boost the economy.   © Reuters

BEIJING -- China will ramp up fiscal efforts to aid the ailing global economy that has been buffeted by the coronavirus pandemic, setting a higher threshold for deficit spending and issuing a special type of bond last seen 13 years ago.

The Communist Party Politburo discussed adjusting macroeconomic policy at a Friday meeting, the state-run Xinhua News Agency reported, a day after leaders of Group of 20 nations pledged $5 trillion to boost the global economy over fears of a worldwide recession.

"The fiscal policy will be more proactive and forceful, while the prudent monetary policy will be more flexible," President Xi Jinping said at the Politburo meeting, according to Xinhua.

A major component of the plan is to increase its fiscal deficit from 2.8% of gross domestic product in 2019, creating more room for big tax cuts and other stimulus measures. Some market analysts expect the new deficit ratio to be significantly higher than 3%.

Beijing also plans to issue so-called special treasury bonds that are not counted toward the fiscal deficit and therefore easy to issue. China has issued similar bonds twice before to inject public funds into banks and to buoy the economy, the last time in 2007.

China will also issue special-purpose bonds to fund infrastructure projects, like roads and airports. The measures will be finalized at the National People's Congress, which could be held as early as next month after being postponed indefinitely from its usual date in early March.

Beijing is also weighing monetary stimulus. The Politburo on Friday said it will guide lending rates down to ensure an appropriate level of liquidity.

The government has also expanded support for small and mid-size companies hurt by the coronavirus, and could lower the benchmark deposit rate for the first time since 2015.

The annual National People's Congress usually starts on March 5 to officially approve fiscal and monetary policies. A large-scale economic stimulus package is expected when the congress reconvenes.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media