China introduces short-term fiscal policies to stimulate economy

BEIJING – China announced on Saturday the implementation of a set of short-term fiscal policies to support the economy, including raising the debt ceiling and replacing local government debts.

Chinese Finance Minister Fo’an Lan stated at a press conference that this package of measures includes “raising the debt ceiling to a relatively large scale, in one go, to replace hidden debts of local governments and help reduce the risks associated with their debts.”

Lan also mentioned that Beijing is “accelerating the use of additional Treasury bonds,” adding that, “Over the next three months, a total of 2.3 trillion yuan (296.84 billion euros) in special bonds will be issued.”

The minister also clarified that Beijing plans to “issue special state bonds to support major public commercial banks.”

The funds will help these banks “rebuild their capital,” improve “their lending capacity, and better serve the development of the economy,” he explained.

Beijing also plans to increase the debt ceiling for local governments, enabling them to increase their spending.

Vice Finance Minister Liao Min specified that local governments will receive special bonds allowing them to acquire unused or idle land, which could stimulate the real estate market.

Beijing will also encourage the acquisition of existing commercial properties to convert them into affordable housing.

Additionally, the six major Chinese banks will lower interest rates on most existing mortgage loans starting October 25, according to separate announcements from these institutions.

This adjustment in mortgage rates will be applied uniformly, and consumers do not need to make any requests, according to the statements.

Last month, the People’s Bank of China asked commercial banks to lower interest rates on existing mortgage loans, as the country aims to ease the financial burden on homeowners.

This decision follows a meeting of the Political Bureau of the Central Committee of the Chinese Communist Party on September 26, where participants emphasised the need to “reverse the downward trend in the real estate market and stabilise it.”