MNI POLICY: China Ramps Up Local Govt Debt to Spur Growth

     BEIJING (MNI) - China will allow special local government bonds issued to

rise by 74.4%  to CNY3.75 trillion this year in a major policy drive to boost

infrastructure investment and revive an already stalling economy stunted by the

Covid-19 pandemic.

     In addition to special bonds, China will further allocate CNY600 billion to

infrastructure investment.

     The proceedings will finance infrastructure to beef up areas including

public health, energy reserves and waterworks, according to reports submitted to

the National People's Congress on Friday.

     Here are other key points from this year's policy papers:

     --FISCAL: 

- Will further cut VAT and fees for businesses amounting to about CNY500

billion. The tax and fee exemptions for private and small companies will all be

extended till year-end. Businesses are expected to save more than CNY2.5

trillion this year.

     - The central government will lead belt-tightening measures with more than

50% cuts to outlays on non-essential and non-obligatory items.

     --MONETARY:

- Further guide down lending rates to significantly reduce companies' financing

costs.

     - Encourage banks to increase lending schemes including renewals without

principal repayment for small businesses. Large banks should increase inclusive

finance lending to small companies by more than 40%.

     --REFORMS:

- Will launch a 3-year SOE reform, improve state capital regulation and further

mixed ownership reform. Keep SOEs focused on main business, market-based

operations and competitiveness.

     - Reform central-local tax revenue allocations to boost local government

coffers.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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