China’s former finance minister called for subsidies for small firms, full removal of property purchase curbs
MACRO POLICY & REGULATION
China’s former finance minister called for subsidies for small firms, full removal of property purchase curbs
MACRO POLICY & REGULATION

China’s former finance minister called for subsidies for small firms, full removal of property purchase curbs

 

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Former finance minster suggest large increase in fiscal deficit to provide subsidies to small businesses, full removal of home purchase restrictions

China’s local debt risks should not be addressed through a debt-to-bond swap program and the country should increase its fiscal deficit by up to 2 trillion yuan to provide phased subsidies for small and medium-sized companies to stimulate the economy, said China’s former finance minister Lou Jiwei. 

On local debts, Lou called for Beijing to stick to its bottom line of not saving local governments, but to resolve the risks in a gradual manner through debt extensions, sales of assets and other methods, adding that he does not expect local government debt will be a large-scale disaster.

Lou also suggested fully removing restrictions on property purchases and loans to boost demand in the sector.

In shifting to high-quality economic development, China’s GDP should increase by 5% – 6% in the coming five years, and fall to 4% – 5% in another five years with an aging population, said Lou.