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China is planning to issue special sovereign bonds worth around 2 trillion yuan ($284.43 billion) this year as part of a fiscal stimulus package aimed at reviving the economy, according to Reuters. The measures are designed to counteract deflationary pressures and sluggish economic growth.
The Ministry of Finance (MOF) is expected to issue 1 trillion yuan of special sovereign debt primarily to stimulate consumption. Proceeds from these bonds will fund subsidies for upgrading consumer goods and large-scale business equipment, as Reuters stated. Additionally, families with two or more children (excluding the first child) will receive a monthly allowance of approximately 800 yuan ($114) to support household spending.
Another 1 trillion yuan is planned to be raised through a separate bond issuance to help local governments address their debt issues. The move comes as most of China’s fiscal stimulus has traditionally been focused on investment. However, returns on this spending are decreasing, and local government debt has accumulated to around $13 trillion. The country’s household spending is notably low, accounting for less than 40% of GDP—20 percentage points below the global average.
Some of these measures could be announced as soon as this week. China’s State Council Information Office and the Ministry of Finance have not yet responded to requests for comment.