China’s Slowing Economy Sparks Calls to Raise Deficit Ceiling
- Beijing urged to subsidize consumers, help local governments
- PBOC has cut rates but borrowing sentiment hasn’t improved
People visit Qianmen Street in Beijing.
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A growing chorus of Chinese economists called on Beijing to break away from an implicit budget deficit ceiling, opening the door to more central government borrowing as a way to shore up the faltering economy.
Officials can consider doubling or tripling this year’s special sovereign bonds to as much as 3 trillion yuan ($420 billion), said Zhang Ming, deputy director of the Institute of Finance & Banking at the Chinese Academy of Social Sciences, a top government think tank. This should go toward subsidizing consumers and alleviating local government debt risks, he added.