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China’s Politburo Announces New Fiscal Measures to Counter Coronavirus

Chinese leaders said Friday that the government would roll out a slew of measures including raising its fiscal deficit in 2020 to counter shocks from the coronavirus pandemic.

The ruling Communist Party’s politburo said in a meeting chaired by Chinese President Xi Jinping that it would strive to minimize damages brought by the pandemic and step up efforts to unveil countermeasures.

The government will increase issuance of treasuries and local government special-purpose bonds, which typically are used to fund infrastructure projects such as ports, railways and roads.

The top policymaking body also urged the government to speed up introducing measures to boost domestic demand as the spread of the virus outside of the country hurt external demand for Chinese goods.

It said it would boost consumer spending and reasonably increase public expenditure.

Economists have widely expected Beijing to unveil measures to boost domestic demand after it made some progress in containing the coronavirus. Business and production in China has been recovering in recent weeks but consumer confidence and economic activity haven’t resumed to pre-outbreak levels.

China’s economic data all fell sharply from a year earlier in the first two months of the year and economists expect the economy to post an on-year contraction in the first quarter.

Restrictions in production and travels in central China’s Hubei Province, the epicenter of the outbreak, were just lifted after fewer cases were reported in and out of the province.

The Politburo said in the meeting that it would introduce targeted measures for Hubei and help the local economy recover from the virus shocks. It also reiterated that the government is still on track to realize its political goal of eliminating poverty by the end of the year though the pandemic has made it more difficult to realize.
Source: Dow Jones

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