Nation to ease corporate burden

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The ministry is also studying a plan to reduce the personal tax burden and is considering granting more tax cuts to families with two children, Xiao said.

While the target of China’s fiscal deficit remains unchanged this year, Zhu Haibin, chief China economist at JP Morgan, said the authorities will likely seek alternative ways such as local government special bond issuance and off-budget spending to support an expansionary fiscal policy stance.

“It looks like the actual fiscal policy implementation will still largely rely on offbudget fiscal spending in 2017. Nevertheless, it is important to impose a hard budget constraint on local governments and to streamline the split between central and local government expenditure items,” Zhu said.

Marie Diron, an analyst at Moody’s Investors Service, said China’s fiscal impulse will be larger to maintain robust economic growth, and government debt may edge up toward 40 percent of GDP.

“The gap between the government’s revenues and expenditure is likely to be wider before funds are reallocated, as has been the case in the last two years. Other public sector spending such as investment by State-owned enterprises also contributes to maintaining robust growth,” Diron said.

At Tuesday’s news conference, Finance Minister Xiao said overall government debt risk is under control, with the debt-to-GDP ratio at around 36.7 percent.

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