China Seen Cutting Local Government Bond Quota to Curb Debt
- Government debt-to-GDP ratio surged following stimulus package
- Beijing to release major annual economic targets on March 5
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China is set to reduce local government bond sales and rein in its budget deficit this year, scaling back the pandemic stimulus measures that fueled debt while helping the economy recover.
The government is likely to reduce its quota for special local bonds -- mostly used for infrastructure spending -- to 3.5 trillion yuan ($541 billion) from 3.75 trillion yuan last year, according to the median estimate of 10 economists surveyed by Bloomberg. The fiscal deficit target is forecast to be cut to 3% of gross domestic product from 3.6% in 2020.