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China is gearing up to launch its inaugural issuance of ultra-long special treasury bonds for 2024, marking the commencement of a planned 1 trillion yuan ($138 billion) fiscal injection into infrastructure projects to bolster economic growth, Caixin reported citing China’s Ministry of Finance.
The issuance, as disclosed by the Ministry of Finance, is scheduled to begin on May 17 and continue until November 15. It will encompass a series of 20-year, 30-year, and 50-year bonds. However, specific details regarding the individual bond values remain undisclosed.
Premier Li Qiang initially outlined this multi-year initiative during the government work report to the National People’s Congress in March, emphasizing the utilisation of proceeds to address funding gaps in pivotal national projects. Notably, these bonds will not be included into the official budget deficit.
As outlined in the finance ministry’s budget plan, the central government will spend half of this year’s 1 trillion yuan issuance proceeds, with the remainder directed to local governments.
According to Liu Sushe, vice chairman of the National Development and Reform Commission, the allocated funds will be used for various purposes, including advancing scientific and technological sovereignty, fostering urban-rural integration, promoting regional development, and enhancing food and energy security.
To facilitate a smooth issuance process, policymakers are expected to implement additional monetary easing measures, such as the reduction of banks’ reserve requirement ratio, to stimulate broad money supply growth, as suggested by Becky Liu, Head of China Macro Strategy at Standard Chartered Bank.
This move comes amid heightened government spending to stimulate growth amid challenges posed by a sluggish property market and subdued consumption. With last year’s GDP growth at 5.2%, achieving the targeted “around 5%” growth this year, as announced in March, remains a difficult task.
According to the Finance Ministry’s schedule, 20-year bonds will be issued monthly from May to November, while 30-year bonds will be issued periodically throughout the year, and 50-year bonds will be issued in three installments.
This initiative, anticipated to significantly bolster government bond issuance in the coming months, reflects a concerted effort to support economic growth amidst evolving fiscal challenges.