Coronavirus: China should raise US$700 billion from special bonds to kick-start economy, top adviser says
- Massive fundraising effort necessary to offset ‘unprecedented’ impact of coronavirus pandemic, says Liu Shangxi, president of the Chinese Academy of Fiscal Sciences
- People’s Bank of China should buy the ‘risk-free’ bonds at zero interest and then sell them on at a later date, he says
The funds created by the debt sale – which would be in addition to already budgeted spending – were necessary to drive investment and restore consumer confidence, both of which had been ravaged by the health crisis, Liu Shangxi, president of the Chinese Academy of Fiscal Sciences, told a forum in Beijing.
The central government has already accelerated its infrastructure spending plans and made more money available to lenders, while local authorities have handed out shopping vouchers in a bid to encourage consumption. But Liu said that measures like cutting banks’ reserve requirement ratios to free up cash were not as effective as issuing special bonds.
“In the face of the unprecedented impact and challenges [of the pandemic], unprecedented policies are needed to match,” he said in a keynote speech, a transcript of which was published on Saturday by Chinese news website Sina.com.
At a recent meeting of the Politburo, the country’s top decision-makers had agreed the need to stimulate consumption, Liu said.