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BEIJING: China’s top parliament body has approved a 1 trillion yuan ($137 billion) sovereign bond issue and passed a bill to allow local governments to frontload part of their 2024 bond quotas, state media said on Tuesday, in a move to support the economy.
Funds raised from the new sovereign bonds will support the rebuilding of disaster-hit areas in the country and improve urban drainage prevention infrastructure to boost China’s ability to withstand natural disasters, state news agency Xinhua said.
That will widen the country’s 2023 budget deficit to around 3.8% of gross domestic product from a previously set 3%, Xinhua said. Reuters reported on Monday that China’s parliament was set to approve just over 1 trillion yuan in additional sovereign debt issuance, citing sources. The approval of the bill by the Standing Committee of the National People’s Congress (NPC) came as it concluded a five-day meeting.
“The additional fiscal support approved today is the intervention we had been expecting and that was needed to prevent an abrupt fiscal tightening in China in the closing weeks of the year,” said Mark Williams, chief Asia economist at Capital Economics. “Fiscal policy has been a prop to growth in China over the last few quarters. These new steps will keep it supportive but not deliver any additional boost.”
Funds raised from the new sovereign bonds will support the rebuilding of disaster-hit areas in the country and improve urban drainage prevention infrastructure to boost China’s ability to withstand natural disasters, state news agency Xinhua said.
That will widen the country’s 2023 budget deficit to around 3.8% of gross domestic product from a previously set 3%, Xinhua said. Reuters reported on Monday that China’s parliament was set to approve just over 1 trillion yuan in additional sovereign debt issuance, citing sources. The approval of the bill by the Standing Committee of the National People’s Congress (NPC) came as it concluded a five-day meeting.
“The additional fiscal support approved today is the intervention we had been expecting and that was needed to prevent an abrupt fiscal tightening in China in the closing weeks of the year,” said Mark Williams, chief Asia economist at Capital Economics. “Fiscal policy has been a prop to growth in China over the last few quarters. These new steps will keep it supportive but not deliver any additional boost.”
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