MNI BRIEF: China Fiscal Policy Has Ample Room - MOF's Lan

China’s fiscal policy has ample room to expand while keeping risks in check, Finance Minister Lan Foan told reporters on Friday, adding that a key focus will be on strengthening coordination between fiscal and monetary policy. 

Long-term trends remain positive, while mechanisms for risk prevention are improving and existing risks are being gradually absorbed, said Lan, noting how over the past four years, China’s economy has grown at an average 5.5%, contributing about 30% to global growth.

Since 2021 the deficit ratio has risen from 2.7% of GDP to 4%, with the government allocating CNY19.4 trillion in new local government special bond quotas and over CNY10 trillion in new tax cuts, fee reductions, and tax rebates, he said. The government has issued CNY 500 billion of special sovereign bonds to inject capital into large commercial banks, expected to leverage around CNY6 trillion of new credit. (See  MNI: China Bad Bank Calls Grow As Debt Saps Growth)