The People's Bank of China's financial statistics in April showed a rare decline in both deposits and loans. It is no wonder that in the past, it has been required to reduce leverage, how many years have it been reduced, and now all of a sudden, everyone is increasing leverage, increasing loans to consume and invest, whether it is enterprises or individual residents, it is difficult to get rid of this inertia of declining leverage.
The implementation of an expansionary monetary policy, or the issuance of additional money by the central bank, has been going on for a long time, and the effect has not been shown. Now there is a change of course and instead calls for a rapid expansion of fiscal policy. Unfortunately, local governments have long been mired in non-performing assets, and it is difficult for them to introduce more expansionary fiscal spending measures. The increase in the issuance of treasury bonds by government investment platforms has become the most important source of funds for fiscal expenditure.
In fact, there is ample room for the Chinese government to issue long-term government bonds. Japan's government debt is more than twice its GDP, and the United States is more than twice its GDP. And the Chinese government's debt-to-GDP ratio. It's only around 30%. And the interest on our 10-year Treasury bond is about 2%. It can be said that the cost is low and the space is sufficient.