Banca March | Finally, China is finalising certain fiscal measures, although it is still not taking a decisive step. The main novelty of Finance Minister Lan Fo’an’s plan is that local entities will be allowed to issue special bonds – normally focused on infrastructure development – to buy empty homes, although no details were given on the amounts available for this purpose. In addition, the ¥2.3 trillion or $325 billion in remaining issuance capacity for the year in special local government bonds was confirmed. Beyond that, there was talk of the possibility of issuing more government debt to support local entities – burdened by the fall in revenue due to lower real estate activity – and it was pointed out that the government has ample room to increase its borrowing, without defining specific amounts. Finally, the amount of special government bonds to increase the capital of state banks will be increased, with the aim of increasing the supply of credit. These measures are a further step towards greater fiscal stimulus, but a decisive move by the Chinese government is still needed, especially measures aimed at boosting domestic consumption.
China takes some fiscal measures, but remains hesitant to move decisively on measures to boost domestic consumption
