China will release funds to local governments more quickly to boost economy

Reuters reports that China will speed up the release of special funds to local governments to support the economy, vice finance minister Xu Hongcai told reporters on Wednesday.

The government has said it would set up special transfer payments of 2 trillion yuan ($289.72 billion) from special treasury bonds and an increased budget deficit to local governments.

"The implementation of specific policies and measures will have a positive impact on investment, consumption as well as imports and exports," Xu told a briefing.

Of the 2 trillion yuan, 1.7 trillion yuan will be allocated to local governments after deducting 300 billion yuan for supporting tax and fee cuts this year, Xu said.

Local governments have spent 509.7 billion yuan, accounting for 30.5% of 1.674 trillion yuan in funds that have been actually allocated from the central government, he said.

Xu said he expected cities and counties that have already received the funds will speed up spending.

The authorities will punish officials who intercept and misappropriate the funds, or those who make false claims, Li Jinghui, a finance ministry official, told the same briefing.

China has set a 2020 budget deficit of at least 3.6% of GDP, up from last year's 2.8%. The government has finished issuing 1 trillion yuan in special treasury bonds.

China's economic recovery from the coronavirus crisis has been building up steam, thanks to pent-up demand, government stimulus and surprisingly resilient exports. But it lost some momentum in July.