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Finance & Economy

China urges local governments to speed up spending to support the economy


Li Keqiang

Li Keqiang

China urged local governments on Thursday to speed up spending this year’s budget to support economic growth but said it would keep overall policy stable and focus on pushing through reforms.

Beijing is reluctant to take broad action to stem a slowdown in the economy, such as relaxing monetary conditions, but analysts said there had been signs of more targeted measures in recent days, such as expanded lending to small businesses and the agricultural sector.

Premier Li Keqiang said on Thursday that growth in the world’s second-biggest economy remained within a reasonable range in the first half of the year and the government should concentrate on reforms.

“We should focus on changing the economic model when economic operations stay within a reasonable range, and adjust (economic) structures and unleash dividends from reforms and opening up,” Li was quoted by state television as saying.

As part of reforms, Chinese regulators will allow more banks to issue asset-backed securities (ABS) in a bid to activate credit to shore up the economy, industry sources said.

The Ministry of Finance, in a statement on its website, said local governments should speed up spending allocated in their budgets for this year and cut the amount of money to be carried over to the following year.

The aim was to “activate the existing fiscal funds and use limited capital to help stabilize” economic growth, the ministry said in the statement published on website http://www.mof.gov.cn.

“For those projects budgeted earlier this year, we should speed up fund expenditures,” it said.

China has budgeted spending of 13.82 trillion yuan ($2.25 trillion) in 2013 and a deficit of about 2 percent of GDP, the ministry said in March.

The minister of finance, Lou Jiwei, said last week that Beijing would not implement large-scale fiscal stimulus this year but would fine-tune policies to support economic growth on the premise of keeping the size of the fiscal deficit unchanged.

CASH CRUNCH

China reported on Monday that economic growth slowed to 7.5 percent in the second quarter, putting pressure on Beijing to quicken reforms to take up the economic slack.

The International Monetary Fund urged Beijing on Wednesday to push forward with reforms in order to ensure continued successful economic growth.

The industry sources said that China’s big banks would be allowed to issue ABS and a quota on such issuance would be scrapped, citing new rules being formulated by the China Banking Regulatory Commission (CBRC) and the China Securities Regulatory Commission (CSRC).

An interbank cash crunch has underscored the central bank’s reluctance to pump more money into the economy and banks have been told to better use existing credit through financial innovations such as asset securitization.

On Tuesday, Premier Li urged caution about rushing to change economic policy to revive sputtering growth, but he also signaled Beijing was prepared to take action if the economy slips too far.

A Reuters poll released on Thursday showed China is on track to hit its annual growth target of 7.5 percent this year, though the economy is unlikely to gain traction next year as the government trades short-term growth for long-awaited reforms.

Source: Reuters – “China urges local governments to speed up spending to support the economy”
 
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About chankaiyee2

Author of the book "Tiananmen's Tremendous Achievements" about how with the help of Tiananmen Protests, talented scholars with moral integrity seized power in the Party and state and brought prosperity to China. The second edition of the book will be published within a few days to mark the 25th anniversary of Tiananmen Protests All the parts in the first edition remain in the second edition with a few changes due to information available later and better understanding. There are also some changes for improvements of style. The new parts are Chapters 12-19 on events in China after the first edition was published: The fierce power struggle for succession between reformists and conservatives; Xi Jinping winning all elders’ support during his mysterious disappearance for 2 weeks in early September, 2012; and Xi Jinping Cyclone. Chan Kai Yee's new book: SPACE ERA STRATEGY: The Way China Beats The US An eye-opening book that tells the truth how the US is losing to China. The US is losing as it adopts the outdated strategy of Air-Sea Battle while China adopts the space era strategy to pursue integrated space and air capabilities: It is losing due to its diplomacy that has given rise to Russian-Chinese alliance. US outdated strategy has enabled China to catch up and surpass the US in key weapons: Hypersonic weapons (HGV) that Pentagon regards as the weapon that will dominate the world in the future. Aerospaceplane in China’s development of space-air bomber that can engage enemy anywhere in the world within an hour and destroy an entire aircraft carrier battle group within minutes. Anti-satellite (ASAT) weapons, anti-ASAT weapons, stealth aircrafts, drones, AEW&C, etc. The book gives detailed descriptions of China’s weapon development based on information mainly from Chinese sources that the author monitors closely. U.S. Must Not Be Beaten by China! China is not a democracy. Its political system cannot prevent the emergence of a despotic leader or stop such a leader when he begins to bring disasters to people. A few decades ago, Mao Zedong, the worst tyrant in world history did emerge and bring disasters to Chinese people. He wanted to fight a nuclear war to replace capitalism with communism but could not bring nuclear holocaust to world people as China was too weak and poor at that time. If a despot like Mao Zedong emerges when China has surpassed the US in military strength, world people will suffer the misery experienced by Chinese people in Mao era. China surpassing the US in GDP is not something to worry about as China has the heavy burden to satisfy its huge population, but China surpassing the US in military strength will be world people’s greatest concern if China remains an autocracy. US people are of much better quality than Chinese people. What they lack is a wise leader to adopt the correct strategy and diplomacy and the creative ways to use its resources in developing its military capabilities. I hope that with the emergence of a great leader, the US can put an end to its decline and remain number one in the world. China, US, space era strategy, air-sea battle, space-air bomber, arms race, weapon development, chan kai yee

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