Economists call for more deficit spending

China will raise its deficit-to-GDP ratio in 2020 to hedge the impact of COVID-19 attack during the impending two sessions, according to a majority of Chinese economic economists, with some calling for a ratio as high as 8 percent.

Based on a survey of 20 economists conducted by the Global Times, 17, or 85 percent, agreed that China should increase its deficit ratio as COVID-19 poses unprecedented high risks for the economy.

Among the analysts, eight believed the debt ratio for 2020 should be between 3 percent and 4 percent, while three thought the rate should be hiked to 4-5 percent. Six offered their estimation as high as 8 percent.

In 2016 and 2017, China's financial deficit rate was 3 percent. In 2018 that number dropped to 2.6 percent and then increased to 2.8 percent in 2019.

Tang Jianwei, chief economic analyst at the Financial Research Center of the Bank of Communications, told the Global Times that the number could increase to 3 - 3.5 percent to cushion the economy.

“The Chinese government's overall debt level is not high and the leverage ratio of the central government is particularly low, so there is still room to appropriately increase the central government's leverage ratio,” Tang said.

The suggested deficit ratio for China would surpass the international safety line of 3 percent that was determined in the Maastricht Treaty. China's deficit ratio has not surpassed 3 percent in the past decade.

Cao Heping, a professor of economics at Peking University in Beijing, suggested the ratio should increase to 4.5 percent. He told the Global Times that as China witnessed a slowdown in economic growth before the COVID-19 pandemic, it needs an active fiscal stimulus to restart the engine.