Chinese leaders agreed at an annual meeting on the economy this week to run a budget deficit of 3% of gross domestic product in 2024, three sources with knowledge of the matter said, while other fiscal support may be covered by off-budget debt, reports Reuters. While the deficit figure is lower than this year’s revised 3.8% target, suggesting Beijing wants to maintain fiscal discipline and is not considering a big fiscal bazooka next year, the option to issue off-budget sovereign debt gives it flexibility to step up stimulus to maintain stable economic growth.
Two of the sources told Reuters special sovereign bonds could be issued to pay for extra expenditures as needed. One of them said they could amount to RMB 1 trillion ($140.16 billion). All three sources spoke on condition of anonymity due to the sensitivity of the discussions.
China has issued special treasury bonds before. In 2020, it sold RMB 1 trillion in such debt to fund COVID-related measures. In 2007, it issued RMB 1.55 trillion to capitalise its sovereign wealth fund. In 1998, it issued RMB 270 billion to recapitalise state banks.