Chinese leaders plan to set an annual growth goal of about 5% for next year, and raise the budget deficit to 4% of gross domestic product, Reuters reported, citing two people it didn’t identify.
December 17, 2024 at 12:04AM EST -- Chinese leaders plan to set an annual growth goal of about 5% for next year and raise the budget deficit to 4% of gross domestic product, Reuters reported, citing two people it didn’t identify.
The State Council Information Office didn’t immediately respond to a faxed request for comment on the Reuters report. A 4% headline budget deficit would be the widest since a major tax reform in 1994, and mark a break with Chinese policymakers’ tradition of capping it at 3%. It would indicate a bolder mindset when it comes to fiscal stimulus, but the size of expansion — only 1 percentage point of GDP from this year — will likely be too modest to fill a widening gap in domestic demand and reverse persisting deflation.
The overall increase in fiscal stimulus — including higher headline deficit and the special bonds — next year could be equivalent to about 2% of gross domestic product, according to forecasts by UBS Group AG and BNP Paribas SA.
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