MNI BRIEF: China To Push Issue Of Local Gov Debt For Growth

Chinese authorities will accelerate issuance of local government special-purpose bonds to expand investment and strengthen tax preferences for key sectors, such as technological innovation, Ministry of Finance officials told reporters Tuesday.

Local governments raised a total of CNY1.32 trillion via special bonds in Q1, with proceeds directed towards projects aimed at boosting investment and stabilising economic growth, said Li Dawei, vice director of the Ministry's budget department. The Ministry will closely monitor the use of funds to ensure efficiency, he added.

According to Xue Xiaoqian, another senior official at the Ministry, the Government paid CNY231 billion of debt interest in Q1, up 15.9% y/y, while income from land sales was CNY872.8 billion, down 27% y/y. Export rebates grew by 11.3% y/y, boosting trade, Xue said, noting the property market had shown positive signs due to a series of supportive policies.

The authorities will continue to optimise taxation and defer the previous preferential policies, which will ease the burden on companies to about CNY1.2 trillion this year. This should stabilise market expectations, said Wei Yan, official with the Ministry's tax policy department.