China can raise 2024 budget deficit ratio to spur growth – central bank adviser

BEIJING (Reuters) – China can raise its budget deficit ratio next year to support the economic recovery because there is still space for the central government to issue more debt, Wang Yiming, a policy adviser to the central bank, said on Friday.

“In the short term, we need to increase the intensity of fiscal policy,” Wang, a member of the Monetary Policy Committee of the People’s Bank of China (PBOC), said at the Caixin Summit in Beijing.

“The central government’s leverage ratio is relatively low and there is still a lot of room.”

A higher budget deficit next year will help drive the country’s economic recovery, he said.

Last month, China sharply lifted its 2023 budget deficit to around 3.8% of gross domestic product from 3% because of the planned issuance of 1 trillion yuan ($137.14 billion) in sovereign bonds.

China is able to achieve economic growth of slightly above 5% this year, Wang said. The government has set an annual growth target of around 5% for 2023.

Weak external demand and inadequate domestic demand increase overcapacity pressures in China, Wang said.

($1 = 7.2918 Chinese yuan renminbi)

(Reporting by Ellen Zhang and Kevin Yao; Editing by Christopher Cushing and Christian Schmollinger)