Chinese yuan Photo:VCG

Chinese government's latest decision to raise national debt ratio to 3.8 percent of its yearly GDP by issuing an additional one trillion in treasury bonds is needed to help build up water conservancy and other infrastructure, which will also benefit home consumption and the country's economic growth, said a senior official on Wednesday.

Even though China's fiscal deficit ratio in 2023 will grow slightly, the government's debt ratio remains within a reasonable range and the overall debt risk is controllable and manageable, said Zhu Zhongming, Vice-Minister of Finance, discussing the new issuance of an additional one trillion yuan ($137 billion) in treasury bonds which will drive the country's fiscal deficit ratio in 2023 to about 3.8 percent. 

Zhu made the remarks at a press conference in response to a media question regarding raising the nation's fiscal deficit ratio over the conventional 3-percent benchmark. 

Zhu noted that even though China's fiscal deficit ratio in 2023 will be slightly higher than previous years, the government's debt ratio remains within a reasonable range and that overall risk is manageable.

After this additional issuance of one trillion yuan worth of treasury bonds, the annual fiscal deficit will increase from 3.88 trillion yuan to 4.88 trillion yuan, and correspondingly, the fiscal deficit ratio will rise from 3 percent to about 3.8 percent, Zhu said. 

He added that the issuance of the 1-trillion-yuan treasury bonds will actively drive domestic demand and further consolidate the upward trend of China's economic recovery. China's GDP grew 5.2 per cent in the first nine months this year.

The Chinese central government will issue the additional one trillion yuan in treasury bonds during the fourth quarter, as part of its effort to support post-disaster reconstruction, make up for weakness in disaster prevention and rescue mechanisms, and improve the country's overall resilience against flooding and other natural disasters.

Global Times