China To Carry Extra $1.4T Debt

China is planning a big economic stimulus. The government is considering taking on over $1.4 trillion in extra debt, with funds raised through special bonds issued by both central and local governments.

This move aims to revive the economy, which has been struggling lately.

About 6 trillion yuan of this debt would be issued over the next three years to help local governments manage hidden debt. If Donald Trump wins the U.S. election, China may increase the package, anticipating more economic pressure from his policies.

The planned debt, amounting to over 8% of China’s GDP, would support local governments and property developers, mainly through special-purpose bonds.

These bonds are expected to boost infrastructure projects and improve land management, helping to stabilize the property market.

China’s economy has been hit by a property crisis and rising debt at the local government level, so aggressive support measures are needed.

Part of the additional funds may also go toward encouraging consumer spending and shoring up state banks.

Experts, however, believe the impact might not match the huge stimulus China rolled out in 2008. While this new package could provide a boost, it might not be enough to significantly improve economic growth or fully restore consumer confidence.