The state-run Xinhua news agency said the money from the new government bonds will support the reconstruction of disaster-stricken areas in the country and improve urban sanitation infrastructure to increase China’s ability to cope with natural disasters. The report revealed that the Standing Committee of the National People’s Congress approved, at the conclusion of its five-day session, the draft law that will increase the 2023 budget deficit from 3% of GDP to about 3.8%.
“The additional fiscal support approved today is the intervention we expected and needed to prevent a sudden fiscal tightening in China in the final weeks of the year. Fiscal policy has been affected in recent quarters,” Mark Williams, chief Asia economist at Capital Economics, told Reuters news agency. “It has been a mainstay of growth in China. These new moves will continue to support but will not provide an additional boost.”
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It is rare for central government budget plans to be reviewed outside the regular budget cycle, so the move signals clear concern about short-term growth.
The report notes that China previously allowed local governments to issue bonds before the annual parliament session that approves the government’s budget plans, which is usually held in March. Regarding the current financing provided, the amount of the bond issuance share that was provided to municipalities out of the $137 billion from next year was not disclosed.
Two other important events took place in China on Tuesday: On the one hand, the Defense Minister and several senior officials were unexpectedly dismissed, and President Xi Jinping and his delegation visited the Central Bank of China and the Foreign Exchange Commission for the first time. time.
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