China on Friday announced “two new” measures, funded by ultra-long bonds, aimed at reviving its faltering economy.
A national planner told a news conference that this year's huge increase in national debt funds will be used as fiscal stimulus to boost business and consumer spending.
Yuan Da, deputy secretary-general of the National Development and Reform Commission, said that this year the scale of ultra-long-term special government bond funds will be significantly increased to strengthen and expand the implementation of the two new measures.
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The two new measures include Durable Goods Subsidy Schemewhere consumers can trade in cars or appliances for new ones and buy new ones at discounted prices, and there is a separate program that subsidizes large-scale equipment upgrades by businesses.
This year, families will also be eligible to receive subsidies for the purchase of three categories of digital products, including mobile phones, tablets, smart watches and bracelets, Yuan said.
In December last year, the National Development and Reform Commission stated that Beijing had fully allocated 1 trillion yuan of funds raised from ultra-long-term special government bonds in 2024, with about 70% of the funds raised being used for “two major” projects, and the remainder being used for new measures.
Zhao Chenxin, deputy director of the National Planning Commission, said at a press conference that China will also increase investment in special government bonds and expand the scope of major measures.
He said that the government has approved 100 billion yuan of major initiative projects in 2025 in advance.
According to official documents, major projects refer to projects such as railways, airports, farmland construction, and security capacity building in key areas.
The world's second-largest economy has been in trouble over the past few years due to a severe housing crisis, high local government debt and weak consumer demand.
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Reuters reported last month that authorities had agreed to release 3 trillion yuan special national debt In 2025, this will be the highest level on record.
Budget deficit 4% of GDP
When talking about the economic growth target for 2025, Yuan said that China will balance its own needs based on its medium- and long-term plans.
Reuters also reported last month that Chinese leaders agreed to increase the budget deficit to 4% of gross domestic product (GDP) by 2025, a record high, while maintaining an economic growth target of around 5%.
Despite the new challenges, “we are confident in promoting sustained economic recovery this year,” Yuan Zheng said, adding that China has ample policy space to support growth this year.
Chinese The central bank may cut interest rates from the current level of 1.5% The Financial Times reported on Friday that the bank would comment “at an appropriate time” in 2025 as part of policymakers' efforts to boost economic growth.
- Reuters Additional editing by Jim Pollard
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