BEIJING – China said on Friday lawmakers had agreed to raise the local government debt ceiling by US$840 billion, opening up new funds for its ailing economy as they eye the possibility of intensified trade tensions with US president-elect Donald Trump. Policymakers were keeping tabs on the US vote as they gathered in the Chinese capital this week for a meeting of the country’s top lawmaking body.

The move would raise “the local government debt limit by 6 trillion yuan ( (US$840 billion), which will be used to replace existing hidden debts, freeing up space for local governments to better develop the economy and protect people’s livelihood”, state broadcaster CCTV said. Hidden debt is borrowing for which a government is liable, but which is not disclosed to its citizens or to other creditors, according to the International Monetary Fund.

“This 6 trillion yuan debt ceiling will be arranged over three years,” Finance Minister Lan Fo’an told a press conference in Beijing. It will be raised from 2024 to 2026 “to support local governments in replacing all kinds of hidden debt”. The move, proposed last month, would allow authorities to borrow more to fund the acquisition of unused land for development – and is aimed at pulling the property market out of a prolonged slump. Lawmakers also approved a new energy law to “promote … carbon neutrality” as Beijing moves ahead with its pledge to decarbonise its economy by 2060. Trump promised during his campaign of punishing tariffs on Chinese goods that threaten further grief for the world’s second-largest economy, which is already grappling with a prolonged housing crisis and sluggish consumption. Observers say Beijing could seek to cushion that blow with a long-awaited “bazooka stimulus” for the economy – though caution details might still take time. (Channelnewsasia)

Photo: People cross an intersection near the central business district (CBD) in Beijing, China. (Reuters)…[+]