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MNI BRIEF: China Must Avoid Sharp Fiscal Deficit Cut: Advisor

BEIJING (MNI)

China should not reduce its fiscal deficit ratio too quickly as the government needs to maintain a fair amount of spending as it withdraws other temporary fiscal stimulus measures, including the CNY1-trillion special central government bond program, according to Liu Shangxi, the president of the Chinese Academy of Financial Sciences affiliated with the Ministry of Finance.

In an interview with state-owned Beijing News, Liu urged a reduction in the scale of off-balance sheet local government special-purpose bonds, which are used to finance infrastructure projects, and a proportionate increase in that of central government bonds in order to improve risk controls.

China set a fiscal deficit target above 3.6% for 2020. The local government special-purpose bonds program was launched in 2014.

MNI Singapore Bureau | +65 9 632 1991 | sumathi.vaidyanathan.ext@marketnews.com
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MNI Singapore Bureau | +65 9 632 1991 | sumathi.vaidyanathan.ext@marketnews.com
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