Beijing's Fiscal Support for the Property Sector in Focus Next Week

Potential Fiscal Adjustments to Stimulate the Property Sector

Beijing may soon address the ongoing fiscal support shortfall impacting the property sector dramatically. According to a central bank policy adviser, the national budget plan could be modified next week, potentially approving an additional 1.5 trillion yuan (US$210 billion) to 2.5 trillion yuan in treasury bonds as part of a broader economic stimulus package.

IMF Insights at the Greater Bay Area Finance Forum

Wang Yiming, Vice-chairman of the China Centre for International Economic Exchanges, emphasized, “China’s fiscal spending is falling short of its annual target.” Recent fiscal policies highlight a projected funding gap of 1.5 trillion yuan requiring bond issuance.

• China's general public spending increased by 2% year-on-year.
• Government fund spending decreased by 8.9%, indicating economic strains.
• Recent monetary easing efforts aim to boost market confidence.

Wang indicated that without more fiscal support, sustaining market rallies may be challenging.

Economic Growth Projections and Adjustments

The IMF recently reduced China's economic growth forecast to 4.8% for the year, down from previously estimated 5%. This adjustment comes amidst warnings that existing monetary policies have yet to provide sufficient support for robust growth.

Fiscal discussions may take place as lawmakers review the bond-issuance quota in the upcoming session of the National People's Congress Standing Committee.

In light of COVID-19 impacts and declining revenues, further fiscal measures are crucial for supporting the troubled property sector and addressing local debt risks.