China: More fiscal stimulus via local governments - ING
According to Iris Pang, economist at ING, one of the key takeaway from China's annual Central Economic Work Conference, was that fiscal stimulus would be bigger from funds raised by local government's special bonds.
“These bonds are not within the local government's fiscal budget, but instead will be similar to the local government financial vehicles however with more transparency. Each local government special bond supports a specific stimulus project.”
“We expect that the special bonds gross issuance in 2019 will be around CNY 3 trillion, which means net issuance of around CNY 2 trillion in line with our estimate of a total fiscal stimulus of CNY 4 trillion. These funds will support local government infrastructure projects.”
“As this issuance will support metals, energy production and construction activities, we believe the positive impact on GDP will be clear and obvious in 2019.”