China's Targeted Incremental Fiscal Policy to Boost Economy

China is taking steps to introduce a series of targeted and incremental fiscal policy measures aimed at stabilizing its economic growth, boosting domestic demand, and managing financial risks. This announcement was made by the Minister of Finance, Lan Fo'an, during a recent press conference.

Details of the Fiscal Package

The proposed fiscal package includes several key strategies. Firstly, it involves raising the debt ceiling significantly in one lump sum. This increase will assist in replacing hidden debts accumulated by local governments, thus helping to alleviate their debt-related issues.

Another critical component of the package is the issuance of special treasury bonds. This initiative is designed to support state-owned large commercial banks in bolstering their core Tier 1 capital, which is essential for enhancing their capacity to manage risks and to provide more credit to consumers and businesses.

Additionally, the plan entails utilizing a mix of financial tools such as local government special bonds, special funds, and various tax policies. These tools aim to stabilize the real estate sector and prevent further declines in property values.

Support for Vulnerable Groups

Lan Fo'an emphasized the importance of providing increased support for vulnerable segments of the population. He highlighted that prior to the National Day celebrations, one-time living allowances were distributed to disadvantaged groups. Moving forward, there will be a stronger focus on offering awards and assistance to students, which is expected to help enhance their overall consumption capabilities.

Future Policy Considerations

The Minister mentioned that the four main policy measures discussed have already started to move through the decision-making process. However, he noted that these are not the only actions being considered. The central government has additional options available, including the potential to borrow more and to adjust the deficit further as needed.

Overall, this targeted incremental fiscal package represents a proactive approach by China to navigate current economic challenges and lay the groundwork for future growth.

China, Fiscal, Economy