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.