Chinese Finance Minister: "Government Will Accelerate Fiscal Spending"

Chinese Finance Minister Liu Kun emphasized accelerating government fiscal expenditure. The government plans to intervene in the sluggish economic recovery by hastening budget execution and supporting the real economy.

According to Xinhua News Agency on the 29th, Minister Liu made these remarks while submitting a report on budget execution entrusted by the State Council at the Standing Committee meeting of the 14th National People's Congress held the previous day. He explained, "We will reasonably increase spending to make fiscal policy more effective," adding, "The goal is to utilize the allocation of new special bonds for local governments, mainly used to finance infrastructure investment, by the end of September and the funds by the end of October."

Minister Liu also stressed, "Going forward, we will focus more strongly on supporting a better real economy," and urged, "We must make full use of policies that encourage innovation, such as R&D expense deductions, and guide more small and medium-sized enterprises to develop in the direction of specialization and innovation." However, there was no mention of specific fiscal expenditure amounts or methods on that day.

This statement came ahead of the Communist Party Politburo meeting composed of 24 top Chinese leaders. This has raised expectations that the Chinese government might introduce stronger economic stimulus measures, including direct support, which it has previously been reluctant to implement.

Recently, as foreign investment rapidly withdrew from the stock market, authorities reportedly issued guidelines restricting fund sales to large mutual fund companies following a reduction in stock transaction taxes. According to Bloomberg News, the China Securities Exchange communicated these restrictions through "window guidance." The day before, it announced a halving of the 0.1% stock transaction stamp duty for the first time in 15 years. According to statistics from the State Administration of Foreign Exchange of China, the direct investment debt in the second quarter of this year was $4.9 billion (approximately 6.48 trillion KRW), a sharp 87% decline compared to the same period last year. Direct investment debt represents the scale of new foreign direct investment (FDI).

Due to sluggish domestic demand, exports, and a downturn in the real estate market, the economic recovery has been delayed. As a result, global financial institutions and investment banks (IBs) have lowered their forecast for China's GDP growth rate this year from the 5% range to the high 4% range.

This content was produced with the assistance of AI translation services.