Photo: VCG

China will carry out "moderate" fiscal expansion to bolster high-quality growth, while strengthening management of local government debt and firmly holding on to the bottom line of preventing systemic risk this year, Chinese Finance Minister Liu Kun said in an interview with the Xinhua News Agency on Tuesday.

In 2023, a proactive fiscal policy should be carried out, including an expansion of fiscal expenditure, promotion of special bond investment and an increase of transfer payments from the central to local governments, especially to poor and underdeveloped areas, Liu said while introducing the priorities for China's fiscal policy in 2023.

Liu said that risks are so far "generally controllable," as the ratio of China's government debt balance to GDP is lower than the internationally accepted warning line of 60 percent, and is also lower than the levels of major market economies and emerging market countries.

China's local governments issued a net 45.5 billion yuan ($6.52 billion) in special bonds in November. In the January-November period, local governments in total issued a net 4.03 trillion yuan in special bonds, the ministry said in a statement on its website.

On December 10, the Ministry of Finance announced that it would issue a 2022 special bond worth 750 billion yuan in an effort to raise funds for the development of the national economy and social undertakings.

In the next step, Liu said regulating the management of local government financing platform companies will be an important part of preventing local government debt risks, noting that the ministry "attaches great importance to the matter."

"We will continue to standardize financing management, strictly prohibit the establishment of new financing platform companies, standardize financing information disclosure, and strictly prohibit linking with local government credit," Liu said.

The ministry will properly handle the debts and assets of financing platform companies, strip their government financing functions and promote the formation of a benign mechanism with clear boundaries between the government and enterprises, Liu said.

Global Times