China has increased its efforts to stimulate its struggling economy, issued more sovereign bonds, and raised its budget deficit target, marking the first time in more than a decade that China has revised its budget outside of the two sessions.
According to the official Xinhua News Agency, China's top legislature on Tuesday approved a plan to issue an additional 1 trillion yuan (about 137 billion US dollars) of treasury bond, half of which will be used before the end of this year, and the other half will be used next year. According to Xinhua News Agency, policy makers stated that the bond issuance is aimed at concentrating efforts to support post disaster recovery and reconstruction, as well as making up for the shortcomings of disaster prevention, reduction and relief.
After a series of measures such as lowering interest rates and lowering mortgage costs for homebuyers, the latest stimulus measures mentioned above indicate that Beijing is still concerned about the weak economic rebound it hopes for after lifting all epidemic restrictions.
Part of the reason for this situation is the increasing debt burden of local governments in more regions of China, and there is almost no sign of easing the real estate crisis.  
With economic growth appearing to have stabilized in recent weeks, many economists are confused about the timing of China's announcement of this measure. However, they believe that the issuance of new bonds is essentially a gradual measure, indicating that it is not enough to reverse long-term unfavorable factors facing the economy, such as insufficient demand from businesses and consumers.
The 1 trillion yuan sovereign bonds account for less than 1% of China's gross domestic product (GDP). In contrast, China's stimulus plan launched during the 2008 global financial crisis accounted for over 12% of its GDP at that time.
Larry Hu, Chief China Economist at Macquarie Group, said that issuing bonds will definitely not turn the situation around; But this move confirms that China's overall policy stance remains supportive given the fragility of the economic recovery.
Some economists say that this stimulus measure sends an unusual signal that the central government is willing to take on the responsibility of providing funding for infrastructure projects, which has been the responsibility of local governments for most of the past few decades.
According to the report of The Wall Street Journal in June, policymakers are considering issuing special treasury bond of about 1 trillion yuan to help local governments with heavy debt burdens and enhance enterprise confidence.   According to people close to the decision-making process of the Chinese government, in the view of the highest leader, austerity policies are superior to stimulus policies.
But this summer's severe floods caused millions of people to evacuate their homes, making the financial situation in Northeast China, especially in Hebei Province, adjacent to Beijing, even more tense. The flood losses have sparked public dissatisfaction.

Xinhua News Agency reported that according to the plan approved by the Standing Committee of the National People's Congress this week, most of the new bonds will be used to help rebuild after recent floods, improve urban drainage systems, and help resist other natural disasters.
Therefore, China's official fiscal deficit (excluding special bonds issued by local governments) will rise to 3.8% of GDP, higher than the government's upper limit of 3% set in March.
Macquarie's Hu Weijun believes that this new stimulus measure should help China maintain a 10% growth in infrastructure investment for the rest of this year, but it does not yet meet the type of stimulus that economists say China urgently needs, which is to directly or indirectly transfer payments to households to stimulate consumption.
Last week, the Chinese government announced a stronger than expected 4.9% year-on-year economic growth in the third quarter. Economists say this result may ensure that China achieves growth of around 5% this year, but it dims the prospects for the Chinese government to urgently introduce more rescue measures.
The last time China revised its budget outside of the two sessions was in 2008, when Chinese officials announced plans to use the 1 trillion yuan raised through local government financing, bank loans, residents' donations, and other channels for the reconstruction of Sichuan earthquake stricken areas. Later that year, the Chinese government announced an economic stimulus package totaling $586 billion to stimulate domestic demand and help avoid a global economic recession.
Macroeconomists at Kaitou stated in a report to clients that it is rare to revise the central government's fiscal plan outside of the normal budget cycle, indicating clear concerns about recent economic growth.
Yao Wei, chief Asian economist of Soci é t é G é n é rale, said that the bursting of the real estate foam exacerbated the funding gap faced by local officials. For a long time, local governments have relied on land transfer as a source of income.
She said that at least the Chinese government is aware that local governments face structural financial constraints; This problem is very serious.
(Update completed)