CHINA-ECONOMY: FORMER CHINESE FINANCE MINISTER SAYS CHINA'S FISCAL SITUATION FACES SEVERE RISKS AND CHALLENGES

Speaking at a conference in December, but the text of which was published by a magazine affiliated with China's Ministry of Finance only in February, China's former Finance Minister Lou Jiwei, who is presently Director of the CPPCC’s Foreign Affairs Committee, warned that China’s fiscal situation is “extremely severe with risks and challenges”. South China Morning Post (February 28) said he cited the fallout from aggressive US stimulus policies, the global economic slowdown during the pandemic, an ageing Chinese population and mounting domestic local government debt as factors. He also warned that China’s fiscal revenue was expected to be stuck at “a low level” in the coming five years, with no sign of the government cutting back its spending, adding that “The fiscal difficulties are not only a near-term or short-term issue, but also will be serious in the medium term”.  Lou Jiwei also said there had been an explosion in the size of the nation’s debt, and estimated that 15 per cent of state spending last year was used to pay interest on the debt, up from the 13 per cent in 2019. The debt sustainability of most provinces and cities would become even more worrisome in the 2021-2025 period as the size of local debt continues to rise, he warned. He added that “According to a rough calculation, about a quarter of the provinces will use more than half of their fiscal revenue to repay capital with interest”.







Subscribe to Newswire | Site Map | Email Us
Centre for China Analysis and Strategy, A-50, Second Floor, Vasant Vihar, New Delhi-110057
Tel: 011 41017353
Email: office@ccasindia.org