MNI POLICY: China To Boost Investment by Special Bonds

--FinMin Liu says Govt, Local Govt bonds to be sold

By Archie Zhang 

     BEIJING (MNI) - China will fund a boost in investment through selling

special central government bonds and local government debt and raising the

deficit to meet fiscal demand, Minister of Finance Liu Kun wrote in a commentary

published by the People's Daily.

     This appeared to be the government's first open acknowledgement how it will

use the money raised by Special China Government Bonds this year, MNI noted.

     Here are major points from Liu's article:

     - China's fiscal revenue will fall due to the impact of the Covid-19

pandemic and the country has already seen revenues decline by 14.3% y/y drop in

Q1.

     - To boost credit to the real economy, government-affiliated financing

guarantee companies will lower fees by half and the overall level of guarantee

fee for financing will be lowered to less than 1% this year.

     - China will further increase the scale of "cutting taxes and fees" with a

focus on SMEs. The government will lower the rents on state-owned properties and

encourage others property owners to lower rents at the same time.

     - The central government will increase fiscal support to local governments

and deal with the potential risk posed by government debts, preventing

escalating domestic and external risks.

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

[TOPICS: M$A$$$,M$Q$$$,MGQ$$$]