At Extreme Investor Network, we are always on top of the latest developments in the world of finance. Recently, a meeting of China’s parliament standing committee caught our attention as they reviewed a proposal to raise the local government debt limit. This move is significant as the new debt would be used to replace hidden debt, a key step in stabilizing China’s economy.
According to Finance Minister Lan Fo’an, the increase in the local debt limit is necessary due to the financial struggles faced by local authorities in China. Historically, these authorities have been responsible for a significant portion of public services spending, but with a drop in revenue from land sales, they have found themselves in a tight spot.
Our experts at Extreme Investor Network have been closely monitoring the situation, with Nomura’s chief China economist Ting Lu estimating that about 10 trillion yuan in additional debt quota could be approved over the next few years to address the hidden debt issue. In fact, Lu suggests that this quota could potentially be raised to RMB15trn if the Chinese economy faces even greater challenges.
As the standing committee of China’s National People’s Congress meets this week, there is a widespread expectation that further fiscal support will be approved to bolster the country’s slowing economy. Committee Chair Zhao Leji is leading the discussions, which are scheduled to conclude on Friday.
Stay informed with Extreme Investor Network as we continue to provide unique insights and analysis on the latest developments in the world of finance. From market trends to policy changes, we’ve got you covered. Trust us to keep you ahead of the curve.