China announced a plan to issue special bonds to kickstart its economy, focusing on bolstering banks, supporting the property market, and easing local government debt. This move is part of a larger effort to address the challenges faced by the second-largest economy in the world, including a property sector crisis and low consumption levels.
The special bonds are intended to increase capital available to banks, encouraging more lending and stimulating consumer spending. Additionally, China will allow local governments to borrow more to acquire undeveloped land, aiming to revive the stagnant property market. Finance Minister Lan Fo’an highlighted the government’s willingness to increase debt and deficits to fund these initiatives.
With a growth target of five per cent for the year, Chinese officials are implementing various measures, including interest rate cuts and liquidity injections. The issuance of special government bonds to support state-owned commercial banks is also in the works. By accelerating the use of treasury bonds and special funds, China is taking steps to achieve its economic goals in the coming months.
Published in Dawn, October 13th, 2024