China to ‘Significantly’ Increase Government Spending, Aiming for Economic Growth Revival
China's Fiscal Stimulus Plans
Finance Minister Lan Foan announced efforts to boost economic growth through increased government spending. The strategy includes issuing special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year. These funds will primarily assist local governments with debt challenges.
Additional Support for Property Market
China is facing strong deflationary pressures largely due to a downturn in the property market. To combat this, the government will subsidize purchases of essential goods. Moreover, families with two or more children will receive a monthly allowance to support consumer spending.
Injecting Capital into State Banks
To enhance liquidity, the government is also considering injecting capital of up to 1 trillion yuan ($142 billion) into leading state banks. This measure aims to increase support for the struggling economy.
Market Reactions and Economic Challenges
The central bank has initiated aggressive monetary support since the Covid-19 pandemic, yet many believe structural issues need addressing. Despite investments, local governments are burdened with $13 trillion in debt, and household spending remains underwhelming.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.