China may fix fiscal spending shortfall next week, policy adviser says

Central bank policy adviser Wang Yiming says China has a funding gap of around 1.5 trillion yuan (US$210 billion)

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Wang Yiming attends the second plenary meeting of the fifth session of the 13th CPPCC National Committee at the Great Hall of the People in March 2022 in Beijing. Photo: VCG via Getty Images

Published: 11:37am, 30 Oct 2024

China’s top legislative body could adjust the national budget plan next week, likely approving an additional 1.5 trillion yuan (US$210 billion) to 2.5 trillion yuan in treasury bonds as part of its economic stimulus package, a central bank policy adviser said on Tuesday.

“China’s fiscal spending is falling short of its annual target,” said Wang Yiming, vice-chairman of the China Centre for International Economic Exchanges, a Beijing-based governmental think tank.

“Estimates suggest a government funding gap of around 1.5 trillion yuan, which will need to be covered by additional bond issuance.”

His comments were made at the Greater Bay Area Finance Forum in Shenzhen held by the Renmin University and the resident representative office of the International Monetary Fund (IMF) in China, where the Washington-based financial agency also presented its “World Economic Outlook”.

In the first nine months of the year, China’s general public spending rose by 2 per cent year on year, while government fund spending dropped by 8.9 per cent, official data showed, both far from the 2024 targets of 4 per cent and 18.6 per cent growth, respectively.

Over the past month, Beijing has rolled out a set of stimulus measures to steer growth toward the annual target of “around 5 per cent,” starting with a larger-than-expected monetary easing package announced by the People’s Bank of China at the end of September.