China fiscal authorities will allocate a budget of CNY66.7 billion this year for employment subsidies and support the implementation of policies to promote jobs and entrepreneurship, Deputy Minister of Finance Liao Min told reporters on Thursday.

The government’s financing guarantees institutions will increase aid for labour-intensive enterprises, leveraging CNY1.3 trillion in new loans in 2024 and ensuring over 12 million job positions and the creation of over 600,000 jobs, Liao noted. Greater emphasis will be placed on promoting employment when formulating fiscal and tax policies, he continued. (See MNI: China Seen Sustaining Fiscal Stimulus As Total Deficit Up)

From January to February, fiscal expenditure increased by 6.7% y/y, marking the fastest expansion for the same period over the past five years. Investment in areas such as social security and employment, education, urban and rural communities, agriculture, forestry, and transportation, has grown rapidly, ensuring strong support for key projects.

The PBOC will likely cut its policy rates and guide down the reference lending rate later this year as inflation remains soft and weighs on the economy's real funding cost. (See MNI PBOC WATCH: LPR Cut Likely Following Policy Rate Reduction)