(Yicai) May 6 -- China needs to further implement a more proactive fiscal policy to effectively counter the negative impacts of external risks on its economy, according to the finance minister.

The US implementation of so-called reciprocal tariffs against all its trading partners is causing turmoil in global markets, and their impact on the Chinese economic development is deepening, Lan Foan said in an article published in official magazine Qiushi Journal yesterday. 

However, China has considerable room for borrowing, sufficient reserve tools, and adequate policy space to address these challenges, Lan noted.

The Ministry of Finance will introduce a series of policies, including vigorously boosting consumption, actively expanding effective investment, accelerating the development of new quality productive forces, strengthening support for troubled enterprises, increasing efforts to improve people’s livelihood, supporting urban-rural and regional integrated development, and preventing and addressing risks in key areas, according to Lan.

Boosting consumption and improving people’s livelihood will be a main focus this year, Lan said. To enhance residents’ consumption capacity and willingness to spend, China will introduce measures such as raising pension levels, increasing financial healthcare subsidies, distributing child-rearing allowances, and expanding student financial aid.

The nation’s investment potential and capacity remain vast, Lan pointed out. This year, additional CNY4.4 trillion (USD609 billion) in local government special bonds will be issued, an increase of CNY500 billion (USD69.2 billion) from last year.

Regarding the policies to strengthen support for enterprises in distress, Lan noted that it is essential to promote the development of the private economy, accelerate the clearing of local government payment arrears to businesses, and intensify the support for enterprises facing external shocks and operational difficulties.

Lan also called for the prompt issuance of the first batch of CNY500 billion special treasury bonds, which would be used to support large state-owned commercial banks in replenishing their core tier-one capital to strengthen operational capabilities and recover idle land for affordable housing to help stabilize the real estate market.

China’s government debt totaled CNY85 trillion (USD11.7 trillion) at the end of 2023, with a government debt ratio of 67.5 percent, according to data disclosed by Lan. The ratio is much lower than the average of 118.2 percent among the G20 nations and 123.4 percent among the G7 counties, indicating a considerable capacity for further borrowing.

Editor: Futura Costaglione