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MNI: High Local Targets Hint At Further China Gov. Leverage

MNI (Singapore)
(MNI) Beijing

The recent local Two Sessions GDP targets could push China's central government to raise more debt to help provincial economies, advisors told MNI.

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Chinese local governments have set lofty GDP targets they aim to meet with increased investment and consumption, but tighter scrutiny over debt raising and falling fiscal revenue will restrain their capacity and could lead the central government to issue more bonds, policy advisors told MNI.

The 31 provincial-level governments across China unveiled their 2024 targets at the annual local Two Sessions meetings last week, setting their weighted average GDP target at 5.4% y/y, compared to 2023’s actual 5.2% print. Shanghai and Beijing, whose targets closely track the national level, set “around 5%”.

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Chinese local governments have set lofty GDP targets they aim to meet with increased investment and consumption, but tighter scrutiny over debt raising and falling fiscal revenue will restrain their capacity and could lead the central government to issue more bonds, policy advisors told MNI.

The 31 provincial-level governments across China unveiled their 2024 targets at the annual local Two Sessions meetings last week, setting their weighted average GDP target at 5.4% y/y, compared to 2023’s actual 5.2% print. Shanghai and Beijing, whose targets closely track the national level, set “around 5%”.

Keep reading...Show less