Veget ert a hetvegi kinai ules, itt a rola szolo osszefoglalo.
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China adds 6 trillion yuan in hidden debt relief, pledges more stimulus as it happened. China’s top legislative body approved additional debt relief for local governments and promised more support next year.
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China’s top legislative body, the National People’s Congress Standing Committee, concluded a week-long session days after Donald Trump was confirmed as the next president of the United States.
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A press conference was held shortly after the proceedings.Before the session, expectations for a large fiscal stimulus plan were high, as changes to the national budget or the fiscal deficit ratio require approval from the legislature.The hotly anticipated stimulus, which would be deployed to help the country reach its target of “around 5 per cent” for gross domestic product growth, may not be as broad or as immediate as initially presumed. After two quarters of weakness, the world’s second-largest economy has shown signs of a rebound, with the official purchasing managers’ index returning to expansionary territory in October.
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Our 7 takeaways
The NPC Standing Committee approved several changes to existing quotas and future allocations for fiscal spending, mostly intended to alleviate debt burdens for local governments and maintain balance in the financial system.Here is our summary of what is in store:
++++++++++++++++++++++++++
China adds 6 trillion yuan in hidden debt relief, pledges more stimulus as it happened. China’s top legislative body approved additional debt relief for local governments and promised more support next year.
.
China’s top legislative body, the National People’s Congress Standing Committee, concluded a week-long session days after Donald Trump was confirmed as the next president of the United States.
.
A press conference was held shortly after the proceedings.Before the session, expectations for a large fiscal stimulus plan were high, as changes to the national budget or the fiscal deficit ratio require approval from the legislature.The hotly anticipated stimulus, which would be deployed to help the country reach its target of “around 5 per cent” for gross domestic product growth, may not be as broad or as immediate as initially presumed. After two quarters of weakness, the world’s second-largest economy has shown signs of a rebound, with the official purchasing managers’ index returning to expansionary territory in October.
.
Our 7 takeaways
The NPC Standing Committee approved several changes to existing quotas and future allocations for fiscal spending, mostly intended to alleviate debt burdens for local governments and maintain balance in the financial system.Here is our summary of what is in store:
- China plans to increase the quota for local special bonds by 6 trillion yuan (US$838.1 billion) over the next three years. For each year from 2024 to 2026, 2 trillion yuan will be used to support local governments as they replace various hidden debts.
- Separately, a total of 4 trillion yuan has been reallocated from local government budgets to swap out hidden debts over five years, with 800 billion yuan used annually through 2028.
- The 2 trillion yuan in hidden debt for shantytown reconstruction - previously announced and due in 2029 or after - will still be repaid according to the original contracts.
- Via the above measures, the hidden debts of local governments are expected to be decreased from 14.3 trillion yuan to 2.3 trillion yuan by the end of 2028.
- The local swap will help reduce interest payment burdens by 600 billion yuan over the next five years.
- China has 85 trillion yuan in total government debt, with a debt ratio of 67.5 per cent. It still has “a lot of room” to take on additional debts.
- The finance ministry vowed there will be “zero tolerance” for new hidden debts from local governments, calling this an “iron rule”.
Financial Forecasts
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