China is expected to take further steps to boost its economy following this week’s significant stimulus package. Analysts anticipate that China will sell at least 1 trillion yuan (US$142 billion) of special treasury bonds and increase its budget deficit ratio in the coming weeks.
Recent interest rate cuts and monetary policy adjustments are part of China’s efforts to achieve its economic growth target of around 5 per cent. The country’s leaders have emphasized the importance of implementing “countercyclical” adjustments to fiscal and monetary policies.
China plans to utilize special treasury bonds and local government special bonds to support necessary fiscal spending and boost investment. With challenges such as a property market crisis and local government debt issues impacting finances, analysts believe China will require additional fiscal support to address budget shortfalls.