MNI POLICY: China Says Faster Local Debt Issuance Aids Growth

     BEIJING (MNI) - China's Ministry of Finance mostly completed the issuance

of additional local government bonds at the end of September, which helps boost

effective investment, Hao Lei, a deputy director of budget department at the

finance ministry, told reporters on Thursday. 

     Here are the major takeaways from a briefing by three officials of the

ministry:

     - The LGB issuance this year was faster-paced with longer maturities and

lower costs. As of the end of September, all CNY3.08 trillion worth of LGB had

been issued. The average issuing rate was 3.42% relative to 3.87% last year.

About 40% is allocated to projects in-progress. Some local governments have used

proceeds from the special-purpose bonds as project capital, Hao said.

     - The central government this year gave CNY7.54 trillion transfer payments

to local governments, the highest in recent years, aiming to ease fiscal

pressure. It also urged local authorities to monitor and control general

expenditure and strive to cut by more than 10%, Hao said. 

     - China is planning the drafting of a consumption tax law to help expand

local revenue sources and enhance local governments' capacity for bigger tax and

fee cut, said Xu Guoqiao, an official with the taxation department. 

     - China's full-year tax and fee cuts will be larger than the targeted CNY2

trillion, with tax burdens on industries such as manufacturing significantly

lower, Xu said. 

     - Tax and fee reductions have had an good effect. The ministry will

continue to pay attention to tax changes in various industries and promote these

reduction policies, Xu said. 

     - Tax revenues have declined since May. The government is actively

increasing non-tax sources to meet the shortfall. Remissions of profits by

state-owed financial institutions and enterprises have increased, helping boost

non-tax revenues, said Liu Jinyun, the director of the payment center of the

National Treasury. 

     - Economy in Q4 continues to run within reasonable range, Liu said. The

growth of national revenue is expected to pick up and reach the targeted 5.1%,

he said.

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

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

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