BEIJING (Reuters) – China can raise its budget deficit ratio next year to support economic recovery as the central government can still issue more debt, Wang Yiming, an adviser to the central bank, said on Friday.
“In the short term, we need to increase the intensity of fiscal policy,” Wang Yiming, a member of the monetary policy committee of the People’s Bank of China (PBOC), said at the Caixin summit in Beijing.
“The central government’s debt ratio is relatively low and there is still plenty of room for maneuver.”
A higher budget deficit next year will contribute to the country’s economic recovery, he added.
Last month, China sharply increased its budget deficit for 2023, from 3% to around 3.8% of gross domestic product, while 1,000 billion yuan (128.52 billion euros) of bonds sovereigns must be issued.
China is on track to achieve economic growth of just over 5 percent this year, he added. The government has set an annual growth target of around 5% for 2023.
Weak external demand and inadequate domestic demand, however, increase the risks that China will have overcapacity, according to Wang Yiming.
(Written by Ellen Zhang and Kevin Yao, Corentin Chappron, edited by Kate Entringer)
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