China is reportedly considering a massive stimulus package as the country looks to breathe new life into its ailing economy.
The second-largest economy in the world may approve a fiscal stimulus worth 10 trillion yuan or $1.4 trillion as soon as next week, reports Reuters.
The country plans to raise fresh debt in the coming years by issuing special sovereign treasuries along with local government bonds.
Sources close to the matter say China is seeking to raise 6 trillion yuan or $840 billion in the next three years to aid local governments in clearing debt hidden from their balance sheets.
Another 4 trillion yuan ($560 billion) will be raised to boost the country’s teetering property sector.
In June, dozens of banks in China abruptly shut down and were acquired by larger institutions as the country witnessed a major downturn in its real estate sector. The situation was exacerbated by poor risk controls and surging local government debt.
China’s national legislature, the Standing Committee of the National People’s Congress, is slated to meet next week to decide on the stimulus package – about the same time the US votes for a new president.
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