<p>Amid a deepening economic crisis driven by the crumbling real estate sector, China has appointed a new finance minister who is tasked with steering the nation away from the troubled waters.</p>

<p>A statement released by the finance ministry on Thursday (Sep 28) revealed that finance specialist Lan Foan will now helm the Ministry of Finance’s Communist Party group, replacing Liu Kun.</p>

<p>The 61-year-old leader was previously holding the position of the party chief of the northern Chinese Shanxi province.</p>

<p>Liu Kun, who held the coveted position since 2018, will turn 67 this year, much beyond the normal retirement age of 65 for civil servants of ministerial rank.</p>

<h2><strong>‘Positive development’</strong></h2>

<p>According to experts, the change in leadership in the finance ministry is a positive development for the country’s economic outlook.&nbsp;</p>

<p>Zhang Zhiwei, chief economist at Pinpoint Asset Management, was quoted by SCMP as saying that the finance ministry reshuffle is “a positive development” for the economy and “indicates the policy stance may become more expansionary”, but it could take time.</p>

<p>“The change of policy may not happen immediately, as we are already close to the end of this fiscal year. Nonetheless this move makes a change in fiscal policy more likely next year, which is positive for the economy,” he said.</p>

<h2><strong>Provincial governments under stress</strong></h2>

<p>One of the biggest challenges before Lan Foan would be to tackle the burgeoning debt crisis on the provincial level. China has traditionally relied on provincial governments to inject financial stimulus into the economy but now experts warn that the central government should shoulder more burden.</p>

<p><strong>Watch:&nbsp;Pak-China's disagreements on CPEC surface: China refuses expansion in key areas</strong></p>

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<p>“Currently, many local governments are financially stretched, and Beijing is reluctant to push through more local government-led fiscal stimulus. The central government could shoulder more of the burden, but remains reticent,” Louis Kuijs, chief economist for Asia-Pacific at Standard and Poor’s Global Ratings, was quoted as saying by SCMP.</p>

<h2><strong>China’s hidden debt problem</strong></h2>

<p>There are also potential default risks posed by local government financing vehicles (LGFVs) in China, primarily stemming from subdued revenue growth prospects in some highly indebted regions of the country.</p>

<p>LGFVs are unique entities that straddle the line between public and corporate, initially designed to navigate around constraints on local government borrowing. Their prevalence has surged since the 2008 global financial crisis.</p>

<p><a href="https://www.wionews.com/world/sadness-in-washington-zoo-as-the-us-preps-to-return-pandas-to-china-640514"><strong>Also read:&nbsp;Sadness in Washington Zoo as US prepares to return pandas to China</strong></a></p>

<p>According to estimates from the International Monetary Fund, China's total LGFV debt has surged to a historic 66 trillion yuan (equivalent to US$9 trillion) this year, more than doubling the 30.7 trillion yuan recorded in 2017.</p>

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Amid a deepening economic crisis driven by the crumbling real estate sector, China has appointed a new finance minister who is tasked with steering the nation away from the troubled waters.

Amid a deepening economic crisis driven by the crumbling real estate sector, China has appointed a new finance minister who is tasked with steering the nation away from the troubled waters. A statement released by the finance ministry on Thursday (Sep 28) revealed that finance specialist Lan Foan will now helm the Ministry of Finance’s Communist Party group, replacing Liu Kun. The 61-year-old leader was previously holding the position of the party chief of the northern Chinese Shanxi province. Liu Kun, who held the coveted position since 2018, will turn 67 this year, much beyond the normal retirement age of 65 for civil servants of ministerial rank. ‘Positive development’ According to experts, the change in leadership in the finance ministry is a positive development for the country’s economic outlook. Zhang Zhiwei, chief economist at Pinpoint Asset Management, was quoted by SCMP as saying that the finance ministry reshuffle is “a positive development” for the economy and “indicates the policy stance may become more expansionary”, but it could take time. “The change of policy may not happen immediately, as we are already close to the end of this fiscal year. Nonetheless this move makes a change in fiscal policy more likely next year, which is positive for the economy,” he said. Provincial governments under stress One of the biggest challenges before Lan Foan would be to tackle the burgeoning debt crisis on the provincial level. China has traditionally relied on provincial governments to inject financial stimulus into the economy but now experts warn that the central government should shoulder more burden. Watch: Pak-China's disagreements on CPEC surface: China refuses expansion in key areas × “Currently, many local governments are financially stretched, and Beijing is reluctant to push through more local government-led fiscal stimulus. The central government could shoulder more of the burden, but remains reticent,” Louis Kuijs, chief economist for Asia-Pacific at Standard and Poor’s Global Ratings, was quoted as saying by SCMP. China’s hidden debt problem There are also potential default risks posed by local government financing vehicles (LGFVs) in China, primarily stemming from subdued revenue growth prospects in some highly indebted regions of the country. LGFVs are unique entities that straddle the line between public and corporate, initially designed to navigate around constraints on local government borrowing. Their prevalence has surged since the 2008 global financial crisis. Also read: Sadness in Washington Zoo as US prepares to return pandas to China According to estimates from the International Monetary Fund, China's total LGFV debt has surged to a historic 66 trillion yuan (equivalent to US$9 trillion) this year, more than doubling the 30.7 trillion yuan recorded in 2017. WATCH WION LIVE HERE ×

Who is Lan Foan, China’s new finance minister? Why is his appointment crucial?

<p>China appointed a new finance minister on Monday who is expected to maintain an expansionary fiscal policy and push reforms to put a lid on rising debt levels in the economy.</p>

<p>Xiao Jie, a former tax chief and minister of finance deputy minister, was named minister of finance, the official Xinhua new agency said on Monday.</p>

<p>Xiao, 59, who is currently deputy secretary general of the State Council, replaces Lou Jiwei, who had served as finance minister since March 2013.</p>

<p>Xinhua did not say why Lou is stepping down, but analysts and policy advisors told Reuters that Lou has to retire as he is 65.</p>

<p>The reshuffle is expected to have little impact on fiscal policy, which is expected to be supportive in 2017 as the government leans more on increased spending and tax cuts to support growth, the analysts said.</p>

<p>Last month, President Xi Jinping said China will maintain a pro-active fiscal policy, adhere to prudent monetary policy and keep reasonably ample liquidity while focusing on controlling asset bubbles and controlling financial risks.</p>

<p>China&#39;s current fiscal deficit target is 3 per cent of gross domestic product (GDP), up from an actual 2.4 per cent in 2015.</p>

<p>&quot;The fiscal deficit is likely to expand further this year,&quot; said a government economist who declined to be identified because he was not authorised to speak to the media.</p>

<p>&quot;Monetary policy could still be accommodative but the effectiveness of monetary policy is falling.&quot;</p>

<p>Some central bank officials have said China has room to raise its fiscal deficit ratio to between 4 and 5 per cent to more effectively boost the economy.</p>

<p>Policy insiders expect Xiao to continue fiscal reforms, but President Xi is seen as calling the shots in setting the key economic and reform agenda.</p>

<p>Top leaders and policymakers are expected to map out the agenda for 2017 at the annual Central Economic Work Conference, expected in December.</p>

<p>Risks posted by China&#39;s growing debt and red-hot property market have touched off an internal debate over whether China should tolerate growth as low as 6 percent in 2017 to allow more room for painful reforms.</p>

<p>Lou has been pushing fiscal reforms under which tight controls have been imposed on new local government debt issuance to help ward off financial risks following a borrowing binge since the global financial crisis.</p>

<p>Local governments have been allowed to swap high-cost maturing debt for lower-cost debt, under a programme that was kicked off in 2015.</p>

<p>China&#39;s overall debt has jumped to more than 250 per cent of GDP from 150 per cent at the end of 2006, the kind of surge that in other countries has resulted in a financial bust or sharp economic slowdown, analysts say.</p>

<p>Under the banner of prudent monetary policy, banks doled out a record amount of credit this year to support growth, but credit has been flowing into the property sector as the real economy weakens, and fuelled debt risks.</p>

<p>The IMF has warned that the high corporate debt ratio of 145 per cent of GDP could lead to slower economic growth if not addressed.</p>

<p>Last week, Lou said in written comments at a forum that China is actively pushing reforms on property taxes as it overhauls its fiscal system.</p>

<p>But policy insiders said the tax is unlikely to be rolled out any time soon due to debates on its economic impact.</p>

<p>China also named Chen Wenqing as the new chief of the secretive Ministry of State Security, as well as a new head of civil affairs, at the closing of a regular session of the standing committee of China&#39;s parliament.</p>

<p>(Reuters)<br />
&nbsp;</p>


The reshuffle is expected to have little impact on fiscal policy

China appointed a new finance minister on Monday who is expected to maintain an expansionary fiscal policy and push reforms to put a lid on rising debt levels in the economy. Xiao Jie, a former tax chief and minister of finance deputy minister, was named minister of finance, the official Xinhua new agency said on Monday. Xiao, 59, who is currently deputy secretary general of the State Council, replaces Lou Jiwei, who had served as finance minister since March 2013. Xinhua did not say why Lou is stepping down, but analysts and policy advisors told Reuters that Lou has to retire as he is 65. The reshuffle is expected to have little impact on fiscal policy, which is expected to be supportive in 2017 as the government leans more on increased spending and tax cuts to support growth, the analysts said. Last month, President Xi Jinping said China will maintain a pro-active fiscal policy, adhere to prudent monetary policy and keep reasonably ample liquidity while focusing on controlling asset bubbles and controlling financial risks. China's current fiscal deficit target is 3 per cent of gross domestic product (GDP), up from an actual 2.4 per cent in 2015. "The fiscal deficit is likely to expand further this year," said a government economist who declined to be identified because he was not authorised to speak to the media. "Monetary policy could still be accommodative but the effectiveness of monetary policy is falling." Some central bank officials have said China has room to raise its fiscal deficit ratio to between 4 and 5 per cent to more effectively boost the economy. Policy insiders expect Xiao to continue fiscal reforms, but President Xi is seen as calling the shots in setting the key economic and reform agenda. Top leaders and policymakers are expected to map out the agenda for 2017 at the annual Central Economic Work Conference, expected in December. Risks posted by China's growing debt and red-hot property market have touched off an internal debate over whether China should tolerate growth as low as 6 percent in 2017 to allow more room for painful reforms. Lou has been pushing fiscal reforms under which tight controls have been imposed on new local government debt issuance to help ward off financial risks following a borrowing binge since the global financial crisis. Local governments have been allowed to swap high-cost maturing debt for lower-cost debt, under a programme that was kicked off in 2015. China's overall debt has jumped to more than 250 per cent of GDP from 150 per cent at the end of 2006, the kind of surge that in other countries has resulted in a financial bust or sharp economic slowdown, analysts say. Under the banner of prudent monetary policy, banks doled out a record amount of credit this year to support growth, but credit has been flowing into the property sector as the real economy weakens, and fuelled debt risks. The IMF has warned that the high corporate debt ratio of 145 per cent of GDP could lead to slower economic growth if not addressed. Last week, Lou said in written comments at a forum that China is actively pushing reforms on property taxes as it overhauls its fiscal system. But policy insiders said the tax is unlikely to be rolled out any time soon due to debates on its economic impact. China also named Chen Wenqing as the new chief of the secretive Ministry of State Security, as well as a new head of civil affairs, at the closing of a regular session of the standing committee of China's parliament. (Reuters)

China gets new finance minister

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Who is Lan Foan, China’s new finance minister? Why is his appointment crucial?

China gets new finance minister