It was another bust for Chinese stimulus on Saturday when the Ministry of Finance delivered more extend and pretend instead of stimulus or reform:
Local governments will be allowed to use special bonds to buy unsold homes, Finance Minister Lan Fo’an announced at a briefing Saturday, without giving an amount. He hinted at room for issuing more sovereign bonds and vowed to relieve the debt burden of local governments, signaling a possible rare revision to the budget that could come in the next few weeks.
While Lan fell short of putting a price tag on any additional stimulus — potentially disappointing investors — the measures announced were largely in line with economists’ expectations of steps to ease the property sector crisis and debt woes that have forced local governments to tighten their belts. Officials said China will also issue special sovereign notes to boost capital at its largest state-owned banks, a move expected to spur lending to lift the economy.
