China's fiscal situation extremely severe, says ex-finance minister

China’s fiscal situation is “extremely severe with risks and challenges”, a former finance minister Lou Jiwei warned at a state pass conference. He held aggressive US stimulus policies, ageing Chinese population and mounting government debt, and slump in the economic growth due to the pandemic as the reason. Following China’s political meeting to discuss their annual legislative session, Lou said that the rebound for china’s fiscal revenue was yet to be ‘consolidated’, as the country’s expenditure rose 2.8 percent in the last quarter of 2020 and fiscal revenue fell 3.9 percent due to the COVID-19 pandemic.

According to China’s state-run press, South China Morning Post (SCMP), Lou warned that Beijing’s economic growth and revenue will remain stagnant for the next five years, with no spending cuts. “The fiscal difficulties are not only a near-term or short-term issue, but also will be serious in the medium term.Lou's warning comes as China's National People's Congress (NPC), the country's legislature, and the Chinese People's Political Consultative Conference (CPPCC), the country's top political advisory body, prepare for the start of their annual gatherings this week.The meetings, known as the "two sessions", are the most important annual political gatherings in the world's second-largest economy, during which Chinese leaders are expected to announce lower targets for the central government's budget deficit and for the issuance of local government special-purpose bonds this year.