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China’s finance chief vows to avert systemic risk from government debt


China’s Finance Minister Liu Kun has vowed to prevent systemic risks from government debt while reiterating plans to appropriately expand fiscal spending to aid economic recovery. Liu said that China’s recovery is still not solid. He cited risks including a contraction in demand and disruptions to supply. He said risks are controllable, with outstanding government debt at below 60% of GDP – a level that’s lower than in major economies. Liu said the country will push forward transforming local government financing-platform companies in a market-oriented way. Liu added that China will also ensure sufficient fiscal spending on Covid-19 controls. China relied on local debt-fuelled infrastructure investment to bolster growth in 2022, as the economy was battered by Covid-19 outbreaks; a property crisis, and a weakening in the outlook for major trading partners.

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