Finance chiefs in Beijing are testing new ways to boost the economy by encouraging demand, breaking with long-established practice as threats to the country’s growth target mount.
The trouble is, this embrace of a more expansionary policy in China’s capital is effectively getting canceled out in the provinces — where authorities are in full belt-tightening mode.
Beijing allocated a large chunk of proceeds from this year’s special sovereign bond sales to subsidies for households and companies that buy new equipment in an attempt to boost demand — something that never happened before. Previously the favored way to spur growth was spending on things such as roads, railways or industrial parks, much of it done by provincial governments.
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