China’s Finance Minister said growth will slow in the future, but the country still has room to increase government debt.
CCTV’s Martina Fuchs reports from Beijing.
A highly anticipated press conference took place at the start of this week. Finance Minister Lou Jiwei said during the two sessions that a larger fiscal deficit ratio this year will help prevent a slide in economic growth and advance structural reform.
The Ministry of Finance said Saturday in its work plan unveiled at the annual NPC session that China has budgeted a 2016 deficit of 3 percent of GDP. The fiscal deficit to GDP ratio was 2.4 percent in 2015.
Lou also said the level of non-performing loans at banks was expected to rise “mildly”, and that reform of the tax system was going more slowly than expected.
In addition, Lou said he believes the risk of local government debt is under control. A total of 5 trillion yuan of local government debt will come due this year. That’s while the outstanding amount of such debt stood at 16 trillion yuan at the end of last year.
Lou’s press conference also aimed at easing international investors’ concerns and reassuring markets that China will continue to implement prudent monetary policy, deepen reforms in the financial sector and the stock and bond markets and further liberalize interest rates. How the global financial markets will react to his messages remains to be seen during this trading week.