China promised new measures to support the property sector and hinted at greater government borrowing to shore up the economy, as authorities seek to put a floor under the country’s growth slowdown.
Local governments will be allowed to use special bonds to buy unsold homes, Finance Minister Lan Fo’an announced at a briefing, without giving an amount. He hinted at room for issuing more sovereign bonds and vowed to relieve the debt burden of local governments.
The measures announced were largely in line with economists’ expectations of steps to ease the property sector crisis and debt woes that have forced local governments to tighten their belts. Officials said China will also issue special sovereign notes to boost capital at its largest state-owned banks, a move expected to spur lending to lift the economy.
China’s sovereign bonds were seen fluctuating in a small range after the Finance Ministry pledged more stimulus to support the economy but stopped short of giving details. The 10-year government bond yield was indicated little changed at around noon, erasing drops of as much as two basis points, according to traders.
Pang and some other economists expect more details of fiscal stimulus to be published after the meeting of top lawmakers in the coming weeks, including the sale of more treasury debt and a mid-year revision of the budget.
