China has pledged new measures to support its property sector and suggested that the government may increase borrowing to stabilize the economy, as authorities work to mitigate the country's economic slowdown.

At a briefing on Saturday, Finance Minister Lan Fo'an and his deputies announced that local governments would be allowed to use special bonds to purchase unsold homes, though they did not specify the amount. Lan hinted at the possibility of issuing more sovereign bonds and committed to easing the debt burden of local governments. This raised the prospect of a potential revision to the national budget in the coming weeks.

Lan indicated that the central government has significant capacity to borrow and expand the deficit but did not provide a specific timeline for these actions.

Although Lan refrained from detailing the cost of additional stimulus—potentially disappointing some investors—the measures were in line with economists' expectations, focusing on resolving the property sector crisis and addressing local government debt issues. Officials also revealed that China plans to issue special sovereign bonds to bolster the capital of its largest state-owned banks, a move expected to increase lending and support economic growth.

During a visit to several cities in northwestern China, Vice Premier He Lifeng described the property market as a key indicator of the country's economic health, according to the official Xinhua News Agency. He urged officials to recognize the political importance of ensuring the delivery of housing projects and stabilizing the market.

Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc., noted that the fiscal measures to address local debt risks, recapitalize state banks, and support the property sector were exactly what the market and investors had been anticipating.