A big question forever is just how much money does the system have left? They are spending money in many directions, bailing out local governments and property companies, expanding military expenditure, and the BRI remains a significant element… But how much money is there? There is virtually no transparency in the system and so it is ultimately impossible to say, but the signs this week suggest there are issues in this regard. First, the central government announced that the planned fiscal deficit will be allowed to expand, the local governments of 12 localities around China were told they were not allowed to expand their indebtedness or start new state funded projects without permission, the order also specifies that debt growth of local government financing vehicles should not be higher than average loan growth rates of the corporate sector in the province. The BRI meeting last week, while it promised continuation of the program, also signaled less and more focused spending in the years ahead. And then there is the national social welfare system. Changes seem to be afoot, which could also be interpreted as a sign of tightened fiscal circumstances.
Meanwhile, former number 2, Li Keqiang, a man who appeared to stand for more rather than less reform, suddenly died. RIP.
Have a good weekend.