Follow China’s Finance Ministry Briefing on Stimulus

1. China will borrow more to raise money and help local governments finance their “hidden debt,” or off-balance-sheet borrowing. This could ease debt pressures for regional authorities, which have struggled to raise funds from traditional avenues like land sales, and allow them to better focus on helping the economy. More details on that will come later, according to Lan.

2. Local governments can use the money raised from their special bonds to buy unsold homes and turn them into subsidized housing. This is the latest step to address the country’s worst property downturn in recent history, but local officials in the past were reluctant to implement the program due to problems with returns and prices.

3. Officials say there’s still “large” room for the central government to raise debt and for the headline fiscal deficit to increase, but they refrained from offering more specifics. Attention will shift to the upcoming meeting of China’s top legislature as soon as the end of this month for any announcement.

4. Major state banks will get help to replenish their capital. The top six lenders have capital levels that far exceed requirements, but the support will help ease any pressure after the central bank unveiled broad reductions to mortgage rates and slashing key policy rates to revive the economy.

5. There’s no new stimulus specified to incentivize consumption, which has been a weak link in the economy, and no specifics on subsidies for households either. And while Lan said local governments have 2.3 trillion yuan of funds from special bonds that they can use by the end of this year, that is not fresh stimulus, as that comprises bonds that have been issued but not used yet, plus bonds that haven’t been issued but are within this year’s quota.