According to Bloomberg, China is reportedly considering a 1 trillion yuan ($137 billion) stimulus to boost its growth and meet economic targets. China would raise its 2023 budget deficit by issuing additional sovereign debt, which would be used to fund infrastructure projects, particularly in the water conservancy sector to improve agricultural productivity.
China policymakers are struggling with weakening domestic demand after the COVID-19. The unconfirmed plan would provide a much-needed boost to its economy if implemented, said by an anonymous source from Bloomberg. In the past, China has launched a massive infrastructure program after the 2008 financial crisis, which resulted in a quick economic rebound as a part of GDP is the government spending by definition.
However, the high level of debt would increase further deficit and impact the country’s long run stability. The utilisation and the benefit of said infrastructures would be critical for China long run growth, which the global economy may be affected by this implementation.