BEIJING (CNBC) - China may have to issue more debt as it tries to keep growing in the face of COVID lockdowns that are stunting its economy.
The country has signaled in recent weeks that it still wants to meet its growth target of 5.5% this year.
China’s Politburo meeting on April 29 sent a “strong signal that policymakers are committed to this year’s GDP target despite downside risks from COVID-19 disruptions and geopolitical tensions,” ANZ Research analysts wrote in a note on the same day.
Chinese state media on Friday reported details of that Politburo meeting, in which officials promised more support for the economy to meet the country’s economic growth target for the year. That support would include infrastructure investment, tax cuts and rebates, measures to boost consumption, and other relief measures for companies.
That’s as foreign investment banks are predicting growth will fall significantly below the 5.5% number, with manufacturing activity slumping in April.
That means China is likely to rack up more debt as it tries to meet its growth targets, according to market watchers.
“To attain the 5.5% target, China may be borrowing from the future and incur more debt,” said ANZ Research’s senior China economist, Betty Wang, and senior China strategist, Zhaopeng Xing.