China to is­sue bonds to spur econ­omy: Bloomberg

The China Post - - LIFE GUIDE POST -

China is aim­ing to is­sue 1.0 tril­lion yuan (US$164 bil­lion) worth of bonds to fund con­struc­tion projects to help boost the slow­ing econ­omy, Bloomberg News re­ported, quot­ing un­named sources.

Two pol­icy banks which lend on gov­ern­ment di­rec­tives, China De­vel­op­ment Bank and the Agri­cul­tural De­vel­op­ment Bank of China, will is­sue bonds, it said, adding the Postal Sav­ings Bank of China would be the buyer, the re­port said.

“We be­lieve the gov­ern­ment is pre­par­ing a large fis­cal stim­u­lus pack­age, with­out which the econ­omy could be head­ing for a hard land­ing worse than that ex­pe­ri­enced in 2008,” Shen Jian­guang, chief Asia economist at Mizuho Se­cu­ri­ties Asia in Hong Kong, was quoted by Bloomberg as say­ing in its re­port Tues­day.

In 2008, China launched a 4.0 tril­lion yuan (now US$656 bil­lion) stim­u­lus pack­age to stave off the im­pact of the global fi­nan­cial cri­sis, a move widely cred­ited with keep­ing the econ­omy on track but also caus­ing a risky build-up in lo­cal gov­ern­ment debt.

China’s econ­omy, a key driver of global growth, ex­panded 7.4 per­cent last year, its weak­est since 1990, and has slowed fur­ther this year, grow­ing 7.0 per­cent in each of the first two quar­ters. The gov­ern­ment has tar­geted an­nual eco­nomic growth of around 7.0 per­cent for all of 2015.

The Peo­ple’s Bank of China, main­land China’s cen­tral bank, in June an­nounced its latest cut in in­ter­est rates, mark­ing the fourth such move since Novem­ber to boost lend­ing as a driver for the econ­omy.

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