Chinese Finance Minister Lan Fo'an said that since this year, the Ministry of Finance of China has seriously organized the implementation of positive fiscal policies, strengthened close cooperation with monetary industry and other policies, vigorously improved policy effectiveness, and worked hard to promote the overall recovery of the economy and high-quality development. In the future, it will accelerate the issuance and use of new treasury bond.
Lan Fo'an made the above statement in an interview with China's official Xinhua News Agency. Xinhua News Agency reported on the visit on Sunday (November 5th).
The Ministry of Finance will continue to implement proactive fiscal policies, focus on improving efficiency, and better leverage the effectiveness of fiscal policies, "said Lan Foan.
Lan Fo'an said that the Ministry of Finance will also continue to make efforts on expenditure, "accelerate the issuance and use of new treasury bond, make good use of new local government special bond funds, and maintain reasonable expenditure intensity".
At the same time, we will strengthen the management of financial funds, strictly enforce financial discipline, and improve the efficiency of fund utilization, "said Lan Foan.
The Chinese economy has not rebounded effectively during the post pandemic period this year, and the government's target of approximately 5% economic growth set at the beginning of this year is difficult to achieve. In addition to the economic losses caused by frequent natural disasters this year, the real estate industry has continued to decline, debt defaults and explosions have occurred frequently, the unemployment rate among young people has skyrocketed, and businesses and individuals are hesitant to invest or consume due to lack of confidence. In addition, the high debt burden of local governments is also a major headache.
In order to stimulate economic growth, the Chinese government has restarted the old drama of boosting the economy by investing funds and increasing central and local government spending. Last month, it announced that it would issue an additional 1 trillion yuan (about 137 billion US dollars) of treasury bond in the fourth quarter.
Lan Fo'an said that since rainstorm, flood, typhoon and other disasters have hit many parts of China this year, and local disaster recovery and reconstruction tasks are relatively heavy, the central government has decided to issue an additional 1 trillion yuan of treasury bond.
61 year old technocrat Lan Foan was just appointed as the Minister of Finance on October 24th. However, he was already appointed as the Secretary of the Party Group of the Ministry of Finance at the end of September. Lan Fo'an, who previously served as the Secretary of the Communist Party of China's Shanxi Provincial Committee, seems to have never had any experience of serving in the central government.
Lan Foan stated that issuing and using local government special bonds is an important measure to regulate local government debt financing, and plays an important role in driving the expansion of effective investment and promoting the overall recovery of the economy.
In the first nine months, various regions issued 3.3 trillion yuan of new special bonds for project construction, which played a positive role in strengthening the foundation, benefiting people's livelihoods, and expanding investment, providing strong support for high-quality economic and social development, "said Lan Foan.
Lan Foan stated that the Ministry of Finance will increase its efforts to better leverage the role of special bonds in promoting sustained economic growth.
According to the deployment of the State Council and relevant work arrangements, some new local government debt quotas for 2024 will be issued in advance to reasonably ensure local financing needs, "he said.
Reuters reported that the growth rate of the Chinese economy in the third quarter of this year exceeded the expectations of some economists, which may also increase the possibility of the Chinese government achieving the target of 5% economic growth for the whole year.
However, due to the ongoing crisis in the real estate industry, private enterprises are unwilling to increase their spending due to lack of confidence, and even consumers are unwilling to spend money. Achieving China's economic growth goal this year remains challenging.
The latest data released by Chinese officials on October 31st shows that the signs of recovery in China's manufacturing industry that emerged in September only lasted for a month before disappearing. Experts believe that the world's second largest economy has not yet emerged from its first comprehensive downturn in recent decades.
The National Bureau of Statistics of China reported that the PMI of China's manufacturing industry fell back to 49.5 in October from 50.2 in September, returning to contraction. 50 is the boom and bust line, with an index higher than the boom and bust line, indicating an upward trend or improvement in economic conditions; Below the boom and bust line, it indicates that the economic situation is tending to decline or decline.
The situation in the non manufacturing sector is slightly better, but there has also been a significant slowdown. The non manufacturing PMI recorded 50.6 in October, slightly higher than the boom and bust line, but much lower than September's 51.7. Non manufacturing industries include a wide range of industries such as services and construction.
The Chinese economy has encountered unprecedented difficulties since entering 2023. In the first quarter of this year, there was a significant increase in domestic consumption due to the relaxation of epidemic control measures, but this rise was very brief and disappeared in the second quarter. Faced with the outbreak of the debt crisis in the real estate market, the rapid and significant increase in youth unemployment, and the increasing uncertainty of a large number of enterprise closures, consumers have tightened their wallets. At the same time, there has been a significant decrease in orders from overseas markets, which has put even more severe pressure on this export-oriented economy.