The deficit-to-GDP ratio is likely to be raised in the year ahead, but breaking the 3% ceiling may not be a great idea, said Feng Qiaobin, a professor at Chinese Academy of Governance, National Business Daily reported.
Since the Chinese economy is facing downward pressure and stabilizing growth has become the top priority for next year, it may be necessary to raise the deficit rate.
However, instead of just focusing on expanding the deficit, there are other policy tools that could strengthen a proactive fiscal policy, including increasing spending, issuing more debt and reducing taxes, Feng said.
Meanwhile, keeping the deficit rate below 3% can send a signal to local governments to control the expansion of investment and financing, especially to control the increase of debt, Feng added.
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