China to accelerate US$224 billion of local bond issuance to support slowing economy
- China has set an annual quota of 3.65 trillion yuan for local government special bonds, which mainly fund infrastructure projects, this year
- China’s local governments issued a net 2.22 trillion yuan (US$347 billion) in special bonds in the first nine months of 2021, accounting for 61 per cent of the quota
China intends to accelerate the pace of local government special bond issuance to bolster investment and economic growth, the finance ministry said on Friday, striving to complete the annual quota by the end of November.
China’s local governments issued a net 2.22 trillion yuan (US$347 billion) in special bonds in the first nine months of 2021, accounting for 61 per cent of the annual quota, Li Dawei, an official at the finance ministry, told a briefing.
The pace of issuance has quickened significantly since August
“The pace of issuance has quickened significantly since August,” Li said.
“We will strive to complete the 2021 special bond quota by the end of November to continue to promote the positive role of special bonds in local economic and social development.”
The figures suggest that local governments could issue a monthly average of 717 billion yuan (US$112 billion) in special bonds in October and November, a sharp increase from the first nine months.
About half of the funds raised from the special bonds in January-September went to transport, urban infrastructure and industrial estates, with the rest going to affordable housing, education and health care sectors, Li said.
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China’s fiscal revenue fell by 2.1 per cent in September from a year earlier due to slowing economic growth and statistical base effects, Liu Jinyun, a second ministry official, told the briefing.
“Fiscal revenue growth is likely to show a downward trend in the next few months,” Liu said, adding that the government remains on track to achieve its planned revenue this year, and the budgeted spending will be guaranteed.
Fiscal revenue grew by 16.3 per cent in the first nine months from a year earlier to 16.4 trillion yuan (US$2.6 trillion), while fiscal spending rose by 2.3 per cent from a year earlier to 17.9 trillion yuan, Liu added.
