Finance

China's Ministry of Finance is taking aim at local debt problems before tackling broader economic challenges

Published

2 years ago

October 14, 2024

China's Ministry of Finance is taking aim at local debt problems before tackling broader economic challenges

The 597-meter high Goldin Finance 117 Tower in Tianjin, China, started construction in September 2008, but still stands unfinished in this picture, taken Aug. 28, 2024.

Nurphoto | Nurphoto | Getty Images

BEIJING — China’s Ministry of Finance press briefing over the weekend underscored how it is focused on tackling local government debt problems, instead of the stimulus markets have been waiting for.

In his opening remarks on Saturday, Minister of Finance Lan Fo’an laid out four measures, starting with increasing support for local governments in resolving debt risks. It was only after he outlined those four points that Lan teased that the country was looking to increase debt and the deficit.

“The press conference is consistent with our view that addressing local government financing struggles is a priority,” Robin Xing, chief China economist at Morgan Stanley, and his team said in a report Sunday. They also expect that the central government will play a larger role in debt restructuring and housing market stabilization.

“However, we believe upsizing consumption support and social welfare spending will likely remain gradual,” the Morgan Stanley analysts said.

China’s real estate market slump has cut into a significant source of revenue for local governments, many of which struggled financially even before needing to spend on Covid-19 measures. Meanwhile, lackluster consumption and slow growth overall have multiplied calls for more fiscal stimulus.

The four policies announced by the Ministry of Finance are focused more on tackling structural issues, Chinese economic think tank CF40 said in a report Saturday.

“They are not specifically aimed at addressing macroeconomic issues such as insufficient aggregate demand or declining price levels through Keynesian-style fiscal expansion,” the report said, in reference to expectations of greater government intervention.

CF40 estimates China does not need additional fiscal funding to achieve the full-year growth target of around 5%, as long as the spending that it has already announced happens by the end of the year.

Local governments drag on domestic demand

Finance Minister Lan on Saturday did say the central government would allow local governments to use 400 billion yuan ($56.54 billion) in bonds to support spending on payroll and basic services.

He added that a large plan to address local governments’ hidden debt would be announced in the near future, without specifying when. Lan claimed that hidden debt levels at the end of 2023 were half what they were in 2018.

Historically, local governments were responsible for more than 85% of expenditure but only received about 60% of tax revenue, Rhodium Group said in 2021.

Constrained local government finances have “contributed to the downward pressure on prices,” the International Monetary Fund said in an Aug. 30 report on China.

The core consumer price index, which strips out more volatile food and energy prices, rose by 0.1% in September, compared to a year ago. That’s the slowest since February 2021, according to the Wind Information database.

To Morgan Stanley, resolving local government debt problems is a “critical step” toward halting the declining trend of prices — almost just as important as stimulus directed at boosting demand.

Waiting for another meeting

After a flurry of policy announcements in the last few weeks, investors are looking ahead to a meeting of China’s parliament, expected at end of the month. China’s legal process requires it to approval national budget changes. The meeting last year, which ended on Oct. 24, oversaw a rare increase in the fiscal deficit to 3.8%, from 3%, according to state media.

Analysts are divided over the specific amount of fiscal support that is needed, if any.

“Whether it’s 2 trillion [yuan] or 10 trillion, for us, it actually doesn’t make so much of a difference,” Vikas Pershad, fund manager at M&G Investments, said Monday on CNBC’s “Squawk Box Asia.” “Our bet on China is a multi-year bet. The Chinese equities are too low in valuation.”

He emphasized the policy direction is “on the right path,” regardless of the stimulus size.

Pershad has talked about buying opportunities in Chinese stocks since January but he said Monday that the latest flurry of activity from the region hasn’t made him any more active in the sector.

China’s policymakers have generally remained conservative. Beijing did not hand out cash to consumers after the pandemic, unlike Hong Kong or the U.S.

Julian Evans-Pritchard, head of China economics at Capital Economics, said at least 2.5 trillion yuan of additional funding is needed to keep growth around 5% this year and next.

“Anything less than that, and I think the risk really is the economy just continues to slow next year given all the structural headwinds that it faces,” he said Monday on CNBC’s “Squawk Box Asia.”

Evans-Pritchard insisted that fiscal policy is more critical for addressing the latest economic slump since China’s other support tools have previously included real estate and credit, which are not as effective this time.

“It’s hard to put a specific number on it because obviously there’s a lot of talk of recapitalizing the banks, dealing with the existing debt problems among the local governments,” he said. “If a lot of the additional borrowing goes into those areas it actually does not stimulate current demand that significantly.”

— CNBC’s Sonia Heng contributed to this report.

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Finance

Why this sleepy Swiss town has become a ‘bolt-hole’ for the Gulf elite

Published

11 hours ago

April 20, 2026

Press Room

Why this sleepy Swiss town has become a ‘bolt-hole’ for the Gulf elite

As conflict continues to destabilise the Middle East, the Gulf States elite are seeking solace in European alternatives that offer comparable financial benefits with a far lower risk of war on the doorstep. One such destination is the small Swiss town of Zug, which is becoming a “bolt-hole” for Gulf-based wealth, said the Financial Times.

‘Swiss Monaco’

Switzerland’s reputation as a magnet for the world’s financial elite is nothing new. In 2025, the country recorded the “densest concentration of millionaires” with an estimated 146 per 1,000 adults last year, said The Times. Now home to around 135,000 people, Zug’s canton – also named Zug – used to be the “poorest corner of Switzerland” until it lowered its tax rates in the 1950s. “Now it has corporate tax rates of 16.2% compared with 40% in the US and 33.3% in France.”

“In almost all ways Zug is unremarkable”, with its traditional Swiss architecture and cobbled waterfront lanes. But if its “Alpine lake water is clear”, the financial scene is more “murky”. Many credit Marc Rich and Pincus “Pinky” Green, founders of metals and minerals trading firm Glencore, with the transformation of Zug from a “Swiss backwater” to its status as the “Swiss Monaco”. The multinational is headquartered just outside Zug, and has made the town a “global powerhouse for trading crude and refined oil products”. It should be “no surprise” that the “1% of the world’s 1%” are taking shelter there, and at the same time, hoping to still “keep a hand in the oil business”.

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“Industry estimates suggest that tens of billions of dollars could flow into Switzerland depending on how the current conflict evolves,” said the Outbound Investment Group. The “immediate trigger” for the “surge in interest” from Gulf-based investors is the war in the Middle East. However, Switzerland’s underlying appeal is its unwavering “Swissness”: “political neutrality”, “strong legal frameworks”, and reputation for wealth preservation. It’s a safe bet with no sign of slowing.

‘Availability tightening’

There are some drawbacks, said the FT. For “would-be arrivals”, the appeal of the region for Middle Eastern residents comes with “practical constraints”. Those outside the EU “face a higher bar”. Usually, the condition of residency is “tied” to employment or company formation. For the “very wealthy”, there is the added option of “negotiated lump-sum taxation agreements with cantonal authorities” that allow individuals to “pay a flat annual tax based on living expenses rather than global income”.

Even if they are holders of EU passports, the “main bottleneck” is the availability of property. Competition is “intense” and “rental supply is extremely limited, with properties often snapped up within days”. With Zug’s “availability tightening”, other cantons in the region with similar tax arrangements could benefit, such as Lugano, an Italian-speaking city in the Ticino region.

The uncertainty of the duration of the conflict is one of the most pressing concerns, said Bloomberg. The recent breakdown of ceasefire talks risks “forcing a reckoning for the professional and expat classes considering options after putting down roots in the Middle East”.

The short-term benefits of physical safety from leaving the Gulf are clear, but changing tax residency “takes time” and practicalities such as finding schools and “conforming to national requirements such as opening local bank accounts” is often “complicated and time-consuming”. The region’s ultra-wealthy are facing “uncomfortable decisions on whether to make the move permanent, especially with the end of the school year in sight”.

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Finance

How much will Social Security go up next year? See latest forecast

Published

23 hours ago

April 20, 2026

Press Room

How much will Social Security go up next year? See latest forecast

Before Social Security payments are posted this week, many retirees are looking ahead at the potential Cost of Living Adjustment for 2027 with an advocacy group predicting a similar increase to 2026.

On April 10, The Senior Citizens League — a nongovernmental advocacy group for seniors — released its monthly COLA forecast for 2027, saying data showed a 2.8% increase is likely.

“Over the last seven weeks, crude oil prices have soared, and fuel prices have followed suit. Consumers are getting pinched at the pump as gas prices soar, while businesses are paying more for transportation and/or production costs. This energy price shock is beginning to show up in the monthly U.S. inflation report, and it’s having a tangible impact on 2027 COLA forecasts,” The Motley Fool, a financial and investing advice company, and USA TODAY content partner, reported on April 18.

The official announcement will come in October, as it’s based on third-quarter inflation data.

According to Consumer Price Index data published last week, the annual inflation rate reached a two-year high of 3.3%, up 0.9% over the last month. This is largely due to soaring oil prices caused by the war in Iran.

Social Security payments are always scheduled on Wednesdays, with the final wave of this month scheduled for April 22, according to the Social Security Administration. The schedule is based on the birth dates of the recipients — retired, disabled workers or survivors.

Here’s who will get a Social Security check this week and more on the 2027 COLA forecast:

When is the final Social Security in April 2026?

Social Security benefits are sent out based on the recipients’ birth dates. Wednesday, April 22, is the final wave of payments for those with birth dates between the 21st and the 31st of April.

What is the 2027 COLA forecast?

The 2027 COLA increase is forecast to be 2.8% due to continuing inflation prices, according to The Senior Citizens League’s April 10 press release. If the SSA approves that rate of increase, average payment for retired workers would go up by $56 per month in January 2027.

The SCL releases a COLA prediction each month based on the Consumer Price Index, Federal Reserve interest rate and the National Unemployment rate from the U.S. Bureau of Labor Statistics.

Beneficiaries who want to stay updated with the monthly predictions may visit the SCL’s “COLA Watch” webpage that includes the forecast, calculations, historical trends and more.

The official COLA increase for 2027 will be announced in October 2026.

What were the big Social Security changes in 2026?

At the beginning of 2026 recipients received a 2.8% COLA for Social Security and Supplemental Security Income (SSI) payments, according to the SSA’s COLA Fact Sheet and American Association of Retired Persons, increasing payments about $56 per month.

Here are more details on the 2026 COLA increase, per the SSA:

The maximum amount of earnings subject to the Social Security tax increased to $184,500.
The earnings limit for workers who are younger than full retirement age (67 years old) increased to $24,480. (There will be a $1 deduction for each $2 earned over $24,480.)
The earnings limit for people reaching their full retirement age in 2026 increased to $65,160. (There will be a $1 deduction for each $3 earned over $65,160, until the month the worker turns full retirement age.)
There is no limit on earnings for workers who are at full retirement age or older for the entire year.

What should I do if I don’t get my Social Security payment?

According to the SSA, if you don’t receive your payment on the scheduled date, wait three days additional days, then call their office.

Where are the Social Security offices in Michigan?

There are 48 offices in Michigan, and to find an office near you, recipients may use the office locator via the Social Security’s website by entering your zip code for office hours, numbers, available services and more.

How can I replace my Social Security card?

The personal account, “my Social Security” allows recipients to manage their personal records, including a request for a replacement Social Security card and benefit statements for taxes and more. New accounts are created using ID.me or Login.gov as a multifactor authentication.

When will I get my checks in May? Full 2026 schedule

USA TODAY Contributed

Contact Sarah Moore @ smoore@lsj.com

Finance

Hong Kong reasserts role as safe haven in global finance amid Iran conflict

Published

1 day ago

April 19, 2026

Press Room

Hong Kong reasserts role as safe haven in global finance amid Iran conflict

The US-Israeli war on Iran has unleashed sharp swings across global energy and financial markets, fuelling demand for safe-haven assets, with Hong Kong emerging as a potential beneficiary across gold, property and capital markets. In the third of a three-part series, we look at Hong Kong’s position as a stable base where demand for property has held firm despite the global turmoil.

The seven-week military conflict in the Middle East will redefine Hong Kong’s role as a global financial centre, positioning the city as a safe harbour for capital and investments.

Anecdotal evidence suggested that more banks had turned to Hong Kong to protect their businesses and committed themselves to expanding their presence in the city. At the same time, inquiries about adding allocations of mainland Chinese assets among global investors had recently increased, potentially enlarging the customer base for the city’s asset-management industry and family offices and driving demand for offshore yuan-linked financial products.

For years, Hong Kong’s status as a financial centre in the Asia-Pacific region has been challenged by Dubai, which has risen to prominence as a gateway linking Asia and Europe in capital flows, transport and logistics. With the war destabilising the Middle East – at one point forcing the closure of the Dubai International Airport and sending stocks in the Gulf region plunging – Hong Kong has re-emerged due to its geographical location, a pegged exchange rate, free capital flows and support from China’s economic strength.

“In that context, China and Hong Kong are attracting renewed attention,” said Gary Dugan, CEO of The Global CIO Office in Dubai, which advises family offices and ultra-high-net-worth individuals globally. “There is growing interest among some clients in increasing exposure to China and Hong Kong. It is less a simple flight to safety and more a reassessment of where investors see relative value, policy consistency and long-term strategic opportunity.”

Dubai now relies on trade, tourism and finance as the pillars of its economy, reflecting the success of its four-decade diversification away from oil for sustained growth. The United Arab Emirates city is home to Jebel Ali Free Zone, the biggest free-trade zone in the Middle East, and the second-largest stock market in the region, with combined market values of US$1.01 trillion. The city, also a global hub for gold trading, has a population of 4 million, about 80 per cent of which are foreign expatriates. Dubai’s economy grew by 4.7 per cent in the January-to-September period last year.