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(Bloomberg) — China will allow local governments to issue bonds to buy unsold homes to support the ailing property sector, as it pushes to put a floor under an economic slowdown.<\/p>\n
Most Read from Bloomberg<\/p>\n
The authorities plan to use special local government bonds and tools to aid the real estate sector, Finance Minister Lan Fo\u2019an announced at a briefing Saturday. He indicated the central government has room to expand spending and promised more efforts to relieve the debt burden of local governments, including by giving a \u201cbig\u201d one-off quota to swap their debt with bonds carrying lower interest.<\/p>\n
\u201cThe central government still has quite large room to borrow and increase the deficit,\u201d Lan said, adding the government has \u201cother tools in consideration\u201d than the measures announced at the briefing. He didn\u2019t specify the amount of money available for the home purchases using the special bonds.<\/p>\n
Fiscal support has been the biggest missing piece in a stimulus package Beijing started to deploy in late September, in an unprecedented push led by the central bank that ranged from interest-rate cuts to aid for the property and stock markets.<\/p>\n
Ahead of the event, investors and economists surveyed by Bloomberg expected the government to commit as much as 2 trillion yuan in new fiscal stimulus.<\/p>\n
More expansionary public spending is deemed crucial to reviving the world\u2019s second-largest economy, which is under deflationary pressure and risks missing the government\u2019s 2024 growth target of around 5%.<\/p>\n
Investors are also watching Lan\u2019s briefing closely for clues on how far Beijing is willing to go with pro-growth efforts that ignited a world-beating stock rally.<\/p>\n
(Updates with more details)<\/p>\n
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