MNI BRIEF: China Debt Risks Under Control - Vice Minister

China’s government debt ratio remains "reasonable and under control" despite the budget deficit increasing to 3.8% from 3% following the increase in the national fiscal deficit, according to Vice Minister of Finance Zhu Zhongming.

Speaking at a press conference on Wednesday, Zhu stressed the central government was responsible for repaying the principal and interest on the new bonds, which would be listed as central fiscal deficit. “The additional CNY1 trillion treasury bonds will not increase the repayment burden of local governments,” he noted.

The government initially plans to use CNY500 billion of the bonds in 2023, and the remaining CNY500 billion in 2024, he said. "Authorities will use the funds to drive domestic demand and further consolidate the trend of China’s economic recovery," Zhu added.

Zhu said the Ministry Finance will now monitor the macroeconomic situation and the bond market to ensure smooth issuance of the newly announced CNY1 trillion in treasury bonds. In terms of specific projects, China would prioritise the 14th Five-Year Plan with a focus on disaster relief and prevention, according to Luo Guosan, director at the National Development and Reform Commission, speaking at the same press conference.