(Bloomberg) — China will allow local governments to issue bonds to support the ailing property sector as it pushes to put a floor under an economic slowdown.
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The authorities plan to issue special local government bonds and use taxation tools to aid the real estate sector, Finance Minister Lan Fo’an announced at a briefing Saturday. Ahead of the event, investors and economists surveyed by Bloomberg expected the government to commit as much as 2 trillion yuan in new fiscal stimulus.
Fiscal support has been the biggest missing piece in a stimulus package Beijing started to deploy in late September, in an unprecedented push led by the central bank that ranged from interest-rate cuts to aid for the property and stock markets.
More expansionary public spending is deemed crucial to reviving the world’s second-largest economy, which is under deflationary pressure and risks missing the government’s 2024 growth target of around 5%.
Investors are also watching Lan’s briefing closely for clues on how far Beijing is willing to go with pro-growth efforts that ignited a world-beating stock rally.
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