Fiscal Policy: Potential Energy, But Not Yet Kinetic

China’s fiscal policy was less expansionary in 1H 2017 compared to last year as local government bond issuance has declined, despite localities reporting the largest on-budget nominal deficit on record. A tighter credit environment is likely to impact economic expansion later this year, which could require more fiscal stimulus to stabilize growth. Strong land sales revenue provides some opportunity for expansion, while on-budget resources are limited.

Posted August 4, 2017
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