A rush to meet annual spending targets pushed China’s quarterly budget deficit to the second largest on record at the end of 2020. But the government has now turned off the taps. Local government bond issuance has dried up altogether since the start of 2021 – a striking contrast with what happened in January in the last couple of years. And the finance ministry has confirmed that key elements of its pandemic response have been halted. Meanwhile, data from the first day of the “Spring Festival travel season” yesterday suggest that the official drive to halt the annual Lunar New Year migration is working.
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