‘Learn from the euro zone’: China’s central bank chief hints at more fiscal power for provinces

China’s central bank chief hinted that Beijing could be considering giving greater fiscal autonomy to its provinces, saying China was big enough to borrow some elements from the 19-member euro zone’s playbook.

“Nations in the euro zone use a single currency but different countries implement different independent fiscal policy,” People’s Bank of China governor Zhou Xiaochuan said in a statement posted on the central bank’s website on Sunday.

“China, a vast and far-reaching land where fiscal conditions in different provinces vary, can consider learning from the euro zone’s experience.”

The remarks were made at an International Monetary Fund meeting in Washington last week.

Market watchers said it was rare to see the central bank chief speak in public in favour of differentiated fiscal policy, and it could mean greater power in store for lower-level governments on fiscal affairs, including tax collection and bond issuance.

Gross domestic product data suggests that economic growth across the country is increasingly headed in different directions, with double-digit growth in some places like Chongqing and recession in others, including the rust-belt province of Liaoning. Those differences are creating new challenges for policymakers in the world’s second-biggest economy.