China's Ministry of Finance announced Saturday it intends to boost borrowing to support cash-strapped local governments and fortify state-owned banks in a bid to tackle a severe slump in the real estate market and flagging consumer confidence. Although Finance Minister Lan Fo’an didn't specify how much additional borrowing or expenditure is planned, he indicated that details might emerge following procedural developments.

The announcement follows a series of stimulus measures that briefly lifted China's stock market but succumbed to investor pessimism over government actions. Addressing the press, Mr. Lan, along with Deputy Finance Minister Liao Min, revealed intentions to bolster major banks with additional funds, enhancing their capacity to handle losses and extend essential credit. This move is seen as crucial, given suspected extensive losses banks face due to widespread defaults in the housing sector, although reported losses remain minimal.

Mr. Lan emphasized the need for local governments to generate revenue by selling assets, despite hesitation due to plummeting property values that may force sales at a considerable loss. Additionally, he pledged ongoing investigations into fiscal management by local governments, focusing on potential mismanagement leading to financial shortcomings among state-owned enterprises and municipal authorities.