China’s Fiscal Policy Update

BEIJING (Reuters) – China has ample fiscal policy space and tools to support economic growth this year and will increase spending to stimulate investment, stated Vice Finance Minister Liao Min on Friday.

Proactive Fiscal Measures Expected

Liao mentioned that a more proactive fiscal policy is anticipated in 2025 in terms of strength, efficiency, and timing, during a press conference.

> “Facing new situations and problems in both internal and external environments, we have sufficient policy space and tools,” Liao emphasized.

Authorities will closely monitor international and domestic situations and will adjust policies as necessary to provide robust support for economic and social development.

Budget and Economic Goals

In December, China’s top leaders committed to raising the budget deficit, issuing more debt, and loosening monetary policy to sustain a stable economic growth rate, as outlined in the Central Economic Work Conference summary.

According to reports, Beijing aims for a budget deficit of 4% of its gross domestic product this year, while targeting an economic growth rate of around 5%.

Local Government Bond Issuance

In 2024, local governments issued 4 trillion yuan ($545.5 billion) in special bonds, which includes 3.9 trillion yuan under the annual quota and 100 billion yuan carried over from 2023, Liao noted. Additionally, local entities swapped 2 trillion yuan in special bonds for hidden local debt by December 18.

> ($1 = 7.3326 Chinese yuan)