Coronavirus economic impact: China requires greater budget support, finance minister says
- Finance Minister Liu Kun called for ‘a more proactive fiscal policy’ to offset the damage already done to China’s economy by the coronavirus outbreak
- The National People’s Congress next week is expected to pass a new economic stimulus package, but the size and composition is still being debated
China will increase fiscal expenditure this year to help offset the damage to the economy resulting from the coronavirus outbreak and ensure that the nation can reduce poverty and achieve its target of building up a comprehensively well-off society by the end of 2020, Finance Minister Liu Kun said in an article published on Thursday.
“Our economic and social development still faces relatively large uncertainties,” Liu Kun wrote in the People’s Daily, the Communist Party’s mouthpiece. “A more proactive fiscal policy is required to offset the mounting downward economic pressures.”
Liu is due to deliver a report to the 3,000 or so NPC delegates for discussion and approval next week, including detailed recommendations for the budget deficit ratio as a percentage of gross domestic product (GDP), the quota of local government special purpose bonds used to fund infrastructure projects, the size and use of a special treasury bond issue, as well as the allocation of fiscal funds to different departments and provinces.
He did not provide exact details in the article but gave general descriptions, namely that the deficit ratio would “rise moderately”, and that there would be an increase in the issuance limit for local government special purpose bonds, as well as a new central government treasury bond issue. He also said that the government would “expand the results of the tax cut” for businesses enacted last year.