China pledges timely fiscal support to bolster growth

[BEIJING] China will roll out additional fiscal policy measures in response to economic developments, Vice Finance Minister Liao Min said on Friday (Aug 21), as growth slows in the world’s second-biggest economy.

China will maintain the continuity and stability of macroeconomic policies and plan and allocate fiscal resources over a longer time horizon, Liao told a press conference.

A greater share of fiscal spending will be directed towards households and consumption, Liao said, as policymakers seek to shore up weak domestic demand.

China will also step up coordination between fiscal, monetary and industrial policies and refine its policy toolkit as economic conditions evolve, Liao said.

He said authorities were preparing new fiscal-financial support measures for the second half of this year, while working with the central bank and regulators to improve economic policy coordination. He did not provide details.

China has expanded loan interest subsidies for small private firms and consumers, the finance ministry said on Friday, as part of Beijing’s efforts to spur domestic demand.

The scheme will subsidise 1 percentage point of interest on eligible small-business loans for up to two years and extend the subsidy to credit-card installment products, while raising subsidy caps, the ministry said in a statement.

China’s leaders pledged at July’s Politburo meeting to support the slowing economy by accelerating fiscal spending on already-budgeted infrastructure projects for the remainder of the year, rather than planning major new stimulus measures.

Beijing is targeting a budget deficit of around 4 per cent of GDP for 2026 and has pledged to quicken bond issuance to shore up growth.

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The central bank said this month it would maintain an appropriately loose monetary stance and roll out practical, effective measures as needed, but stopped short of signalling explicit cuts to policy rates or banks’ reserve-requirement ratio.

Liao said China would deepen fiscal and tax reforms, improve the budget management system, and build a clearer framework for central-local fiscal relations, with more clearly defined responsibilities and more balanced regional development.

Preventing local governments from taking on new hidden debt must remain an “iron discipline”, he said, adding that fiscal risks in key areas, particularly local government debt, should be steadily reduced. REUTERS