China will allow local governments to sell another 848 billion yuan ($122 billion) of debt before March, as authorities seek to offset the economic shock of the coronavirus.
The new quota includes 558 billion yuan of local government debt as well as 290 billion yuan of so-called special debt, according to a Ministry of Finance statement Tuesday. The latter is mainly used to finance local infrastructure projects like highways and health facilities. The bonds are in addition to a previously-approved quota of 1 trillion yuan.
Local authorities are under renewed pressure as they grapple with a viral outbreak that shut down the majority of China’s economy after the Lunar New Year break. A majority of provinces are forecasting that revenue will grow 5% or less this year, with some expecting it to shrink, according to a Bloomberg analysis of their 2020 economic plans.
Even before the new coronavirus was known about, Beijing had already accelerated the sale of local-government debt in 2019 to support the slowing economy. The annual session of the National People’s Congress typically approves the year’s budget. The NPC meetings are currently scheduled to open March 5.
What Bloomberg’s Economists Say..
“We now expect the general budget deficit target to widen from 2.8% of GDP in 2019 to 3% for 2020 -- the widest target ever. And it could provide extra stimulus by increasing the quota for special bond issuance -- which would give provinces more space to boost spending on infrastructure.”
-- David Qu, Bloomberg Economics
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To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net;Tian Chen in Hong Kong at tchen259@bloomberg.net
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Sofia Horta e Costa, James Mayger
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