China May Raise $850 Billion in New Debt Over Three Years to Spur Growth, Says Report

• China may raise an additional 6 trillion yuan (US$850 billion) from special treasury bonds over three years to stimulate a sagging economy, local media reported a figure that failed to revive sentiment in the country's stock market.
• The Caixin Global report, which cited sources with knowledge of the matter, comes after Finance Minister Lan Foan on Saturday said Beijing will "significantly increase" debt, although the absence of details on the size and timing of the fiscal measures disappointed some investors.
• Data in recent months, including Monday's trade and new lending figures for September, missed expectations, raising concern that China may not reach this year's roughly 5.0% growth target and will struggle to fend off deflationary pressures.
• In late September, authorities unleashed monetary stimulus and property sector support measures. Soon after, a meeting of top Communist Party leaders, the Politburo, vowed the "necessary spending" to bring growth back on track. "The probability of reaching a growth rate of about 5% at least in 2024 and 2025 would increase a lot," Bruce Pang, chief China economist at Jones Lang LaSalle, said of the impact of the reported 6 trillion figure.
• The Caixin article published late on Monday said the funds would be partly used to help local governments resolve their off-the-books debts, according to the sources. The reported amount is equivalent to nearly 5% of China's economic output.
• The International Monetary Fund estimates central government debt at 24% of economic output. But the fund calculates overall public debt, including that of local governments, at about $16 trillion, or 116% of GDP.

(Source: Reuters)