China flags wider fiscal deficit as the economy cools

Beijing

CHINA will pursue an expansionary fiscal policy this year to prevent its economy from stalling, Finance Minister Lou Jiwei said on Friday as he assured investors that the authorities are keeping an eye on heavily indebted local governments. Asked how China would manage its rising debt levels as its economy loses steam, Mr Lou said the country has to balance the need to deleverage without pushing the economy over a "cliff".

To underscore the importance of state spending, he said China's actual fiscal deficit should be worth 2.7 per cent of its 2015 gross domestic product (GDP) after taking into account 112.4 billion yuan (S$24.6 bil…