China has room to increase its budget deficit to 4 percent of gross domestic product as the government seeks to cut corporate taxes, central bank officials wrote in an article on the official Economic Daily’s website.
Low levels of government debt, “relatively fast” economic growth and abundant state-owned assets allow the country to sell more bonds, the article written by People’s Bank of China officials including Sheng Songcheng, head of the statistics department, said.
China could maintain a debt-to-GDP ratio of up to 70 percent at the end of 2025 if the deficit were raised to 4 percent, the officials said, Bloomberg reported Thursday.
The country is looking to fiscal policy to help it grapple with the slowest economic growth since 1990.
The deficit is likely to rise this year from 2.3 percent of GDP in 2015, the official Xinhua news agency reported recently.
Vice Finance Minister Zhu Guangyao said last year the “red line” of 3 percent for the deficit-to-GDP ratio and 60 percent for the debt-to-GDP ratio should be revisited after lessons learned from the financial crisis.
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