China's stimulus measures will shore up economic growth this year and next ...
BEIJING - China’s stimulus measures will shore up economic growth this year and next but may undermine the country’s drive to control debt and worsen structural distortions over the medium term, the OECD said in a report on Tuesday.
Local governments will be allowed to issue 2.15 trillion yuan worth of special purpose bonds in 2019 to fund infrastructure projects, a jump of 59 percent from last year. “The stimulus risks increasing once again corporate sector indebtedness and, more generally, reversing progress in deleveraging,” it said.
China’s fiscal stimulus could be as high as 4.25 percent of GDP this year, up from 2.94 percent in 2018, the OECD added. New bank loans rebounded more than expected in March, capping a record 5.8 trillion yuan quarter, as policymakers push lenders to support struggling smaller, private companies, which are seen as higher credit risks than state-controlled firms.
But top officials have repeatedly vowed not to open the floodgates in an economy already saddled with piles of debt - a legacy of massive stimulus during the global financial crisis in 2008-09 and subsequent downturns.
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