China has room to act on fiscal policy amid uncertainties, finance minister says

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China has room to act on fiscal policy amid uncertainties, finance minister says

China’s Minister of Finance Lan Fo’an speaks during a press conference in Beijing on Nov. 8, 2024. 

Adek Berry | Afp | Getty Images

BEIJING — China has more room to act on fiscal policy amid domestic and external uncertainties, Finance Minister Lan Fo’an told reporters on Thursday.

He was responding to a question during China’s “Two Sessions” annual parliamentary meeting about the country’s plans for proactive fiscal policy this year.

China on Wednesday announced it was raising its on-budget deficit to 4% of the country’s gross domestic product — the highest since at least 2010.

The government also plans to issue 1.3 trillion yuan ($178.9 billion) in ultra-long-term special treasury bonds in 2025, marking a 300 billion yuan hike from last year. The increased amount is primarily set to support the consumer trade-in program.

China said it aims to issue 4.4 trillion yuan of local government special-purpose bonds this year — or a 500 billion yuan increase from last year — to help ease the financial strains of local authorities.

The country on Wednesday also said it would target a gross domestic product increase of around 5% this year, while lowering its inflation target to 2% — the lowest in around 20 years.

“China has delivered a pro-growth message here at the [National People’s Congress], in line with expectations,” said Aaron Costello, head of Asia at Cambridge Associates. The NPC is part of the “Two Sessions” meeting.

Costello noted that, beyond specific stimulus programs, the ******* issue facing China has been low business and consumer sentiment. He pointed to encouraging signals such as ******** President Xi Jinping’s meeting with many tech entrepreneurs last month to encourage private business growth.

This breaking news story is being updated.

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