China May Raise $846 Billion to Boost Growth, Caixin Reports

(Bloomberg) -- China may raise 6 trillion yuan ($846 billion) from ultra-long special government bonds over three years as part of its efforts to boost the sputtering economy, Chinese media outlet Caixin reported.

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The funds will be partly used to help local governments relieve their burden from off-balance-sheet debt, according to the report late on Monday, citing unidentified people.

Investors and analysts have been speculating over how much the Chinese government will borrow to fund a fiscal stimulus package. Finance Minister Lan Fo’an hinted at room for the central government to leverage up on Saturday without specifying a headline dollar figure that markets had sought.

Revved up fiscal spending is still seen as holding the key to sustaining the rebound ignited by the central bank’s stimulus blitz in late September. Traders are betting that the Standing Committee of the National People’s Congress, China’s top legislature, will approve extra budget funding at its meeting later this month.

At the Saturday briefing, Lan said there will be an one-off effort to replace local government’s hidden debt, or off-balance-sheet borrowing by companies they control. The program will be the “largest in recent years,” he said, without providing more specifics.

This measure could be key to resolve risks related to local government financing vehicles, which the International Monetary Fund estimated held over 60 trillion yuan debt as of last year. Such borrowings are costly to service and added to strains of local authorities’ finances in the face of falling income from land sales and taxes.

--With assistance from Yujing Liu.

(Updates with more context)

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