China watchers are highlighting this article.
It’s called “The Basic Understanding of China’s Current Fiscal Deficit Issue” and was written in the state-sponsored China State Finance publication. It comes at at time when the market and many economists are begging for heavy government borrowing and spending, with the National People’s Congress ongoing this week.
“There is still room in terms of intensity for central-level fiscal deficits in the next few years,” it says. ” However, from a long-term perspective, pursuing cyclical fiscal balance remains our goal.”
It notes that the deficit to GDP ratio in China is less than 30% compared to 122% in the US at the end of 2023 and 260% in Japan.
The report highlights balancing the budget over time and some have a hawkish take on the article but it reads neutral to me.
It also says this:
For cities and counties with good fiscal conditions, the restrictions on fiscal deficit scale can be moderately relaxed, but fiscal balance should be achieved in the medium term; for cities and counties with problems in fiscal operations, contingent deficits and new implicit debt must be strictly controlled.
