China May Exceed Deficit Limit to Boost 2023 Growth Amid Economic Challenges
• China can adopt a more expansionary fiscal policy in 2023 to boost economic recovery amid challenges like property downturn and local debt stress.
• Experts suggest budget deficit could exceed 3% red line and even reach 4% in 2023. Higher deficit provides funds for households, companies and governments.
• Additional 1 trillion yuan bond issuance raises 2023 fiscal deficit rate to 3.8%, a record high.
• Fiscal policy should focus on consumption not investment. Economy may expand 5% in 2023 with supportive policies.
• Manage risks from local government hidden debts and real estate correction, which may take 2-3 more years.