China says will quicken special funds spending to support economy

BEIJING, Nov 12 (Reuters) - China will speed up the spending of special funds allocated to local governments to help support the economy, vice finance minister Xu Hongcai said on Thursday.

By the end of October, local governments had spent 1.198 trillion yuan ($180.7 billion), accounting for 70.9% of special funds actually allocated from the central government, Xu told a briefing.

“The move has effectively enhanced the grass-roots units’ financing capacity, strongly supported the epidemic prevention and control, economic and social development and poverty alleviation,” Xu said.

The government has said it would set up special transfer payments of 2 trillion yuan from special treasury bonds and an increased budget deficit to local governments, including 1.7 trillion yuan for allocating to local governments and 300 billion yuan for supporting tax and fee cuts this year.

Finance ministry official Hao Lei told the same briefing that some local governments had struggled to find qualified projects, but such problems had been largely resolved.

China has set a 2020 budget deficit of at least 3.6% of GDP, up from last year’s 2.8%. The government has finished issuing 1 trillion yuan in special treasury bonds.

China’s economy grew 4.9% in the third-quarter from a year earlier, but growth could slow to just over 2% this year - the weakest in over three decades but still much stronger than other major economies. ($1 = 6.6283 Chinese yuan renminbi) (Reporting by Kevin Yao, Editing by William Maclean)