Amid external economic challenges, China still has ample room to expand borrowing and increase investment in livelihood-related sectors to stimulate growth and boost consumption, a Chinese expert said.
Zhang Bin, deputy director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, underscored China's significant achievements in infrastructure development, but emphasized that there remains considerable potential in sectors related to people's livelihoods.
"China has made remarkable progress in areas such as railways, roads, airports, and industrial support facilities, with the development in many of those areas even surpassing those in some developed countries. However, when it comes to public investment in livelihood-related sectors, such as libraries, museums, and sports venues, our per capita levels remain relatively low, amounting to just one-fifth to one-tenth of those in high-income countries. Meanwhile, there is also room for improvement in the public infrastructure of metropolitan areas, particularly in urban-rural fringes, where many people live but still lack adequate public services and facilities. If we focus investment on areas that directly impact people's well-being, there is still vast development potential," said Zhang.
According to the government work report approved in March, China has set its general public budget for 2025 at 29.7 trillion yuan (about 4.07 trillion U.S. dollars) , an increase of 1.2 trillion yuan (about 160 billion U.S. dollars) over the previous year. More than half of the budgeted spending will be allocated to livelihood-related areas such as employment, basic medical and health services, and social security.
Zhang further noted that China has ample room to increase borrowing to support such investments, which would, in turn, help raise household incomes and stimulate consumption.
"First, we need to recognize that the Chinese government's debt level is still relatively low compared with developed countries," said Zhang.
"Many developed economies are already grappling with high inflation, leaving them little space to cut interest rates or expand borrowing. In contrast, China's inflation remains low, indicating that increased government borrowing and spending would not pose significant inflationary risks. Moreover, China has a high saving rate and Chinese people tend to save a significant portion of their income. At the same time, the interest rates in China are at a low level, which means our debt paying ability is stronger than before, and there is more space to expand borrow. In such a context, government borrowing can drive corporate profits, boost tax revenues, and raise household incomes, ultimately stimulating overall purchasing power and revitalizing the economy," said Zhang.
China has ample room to expand borrowing, boost public investment: expert
