BEIJING – China can consider further deficit spending by the central and local governments, if needed, to finance support for small businesses, a former finance minister said on Saturday.
To spur consumption, some local governments have issued consumption vouchers, but those steps remain inadequate due to a serious decline in fiscal revenue at all levels, Lou Jiwei told the Caixin Summer Summit in Beijing.
China has unveiled a raft of economic support measures in recent weeks, but analysts say its official 2022 economic growth target of around 5.5% will be hard to achieve.
This year, much of the support for the world’s second-biggest economy has come from fiscal stimulus to counter the impact from COVID-19.
The cabinet has told local governments to ensure 3.45 trillion yuan ($515 billion) in special bond issuance for infrastructure – part of the 2022 special bond quota of 3.65 trillion yuan – is completed by the end of June.
China will front-load some planned 2023 bond issuance in the fourth quarter of this year, with the new quota likely bigger than 1.46 trillion yuan for 2022, sources have told Reuters.
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There is still some room for the central government to disburse funds, said Lou, who is now at a top political advisory body.
“When necessary, we can increase the central and local budget deficits,” he said.
($1 = 6.6945 Chinese yuan renminbi)
(Reporting by Ryan Woo and Tina Qiao; Editing by William Mallard)