China to issue local government bonds to support property sector

Fiscal support has been the biggest missing piece in a stimulus package Beijing started to deploy in late September

China will allow local governments to issue bonds to support the ailing property sector as it pushes to put a floor under an economic slowdown.

The authorities plan to issue special local government bonds and use taxation tools to aid the real estate sector, Finance Minister Lan Fo’an announced at a briefing Saturday. Ahead of the event, investors and economists surveyed by Bloomberg expected the government to commit as much as 2 trillion yuan in new fiscal stimulus.

Fiscal support has been the biggest missing piece in a stimulus package Beijing started to deploy in late September, in an unprecedented push led by the central bank that ranged from interest-rate cuts to aid for the property and stock markets.

More expansionary public spending is deemed crucial to reviving the world’s second-largest economy, which is under deflationary pressure and risks missing the government’s 2024 growth target of around 5%.

Investors are also watching Lan’s briefing closely for clues on how far Beijing is willing to go with pro-growth efforts that ignited a world-beating stock rally.