BEIJING (Reuters) – China is set to unleash trillions of yuan of fiscal stimulus to revive an economy expected to shrink for the first time in four decades amid the coronavirus pandemic, while a planned growth target is likely to be cut, according to four policy sources.
FILE PHOTO: Pedestrians wearing face masks ride an escalator near an overpass with an electronic board showing the Shanghai and Shenzhen stock indexes, following an outbreak of the novel coronavirus in the country, at Lujiazui financial district, in Shanghai, China March 13, 2020. REUTERS/Aly Song/File Photo
The ramped-up spending will aim to spur infrastructure investment, backed by as much as 2.8 trillion yuan ($394 billion) of local government special bonds, said the sources. The national budget deficit ratio could rise to record levels, they added.
Beijing is likely to have to lower its economic growth target for 2020 given the prolonged impact of the pandemic, according to the sources involved in internal policy discussions who declined to be named due to the sensitivity of the matter.
Chinese leaders are considering proposals from advisers to cut it to as low as 5% from the original target of around 6% agreed in December, they added.
The National Development and Reform Commission, the top state planner, the finance ministry and the central bank did not immediately respond to Reuters’ request for comment.
The measures come at a time when private-sector analysts are slashing their growth forecasts for China to lows not seen since the