Specialty bonds are important for stimulating the economy


A technician at a steel production line at Magang Group, part of China Baowu Steel Group, in Manshan, Anhui province. Luo Jisheng/For China Daily

Experts said that special local government bonds, especially those recently issued in some provinces, are playing an increasingly important role in stabilizing China’s overall development and improving the quality of development.

The Fujian Province Finance Department announced earlier this month that the Ministry of Finance had prematurely issued the province’s remaining quota of 103.4 billion yuan ($14.48 billion) for 2023 on November 1, which is 33.9 percent more than the scheduled time. last year.

According to the statement, the funds from these newly issued bonds will be used to support the construction of major projects in transportation, infrastructure, new energy projects and new infrastructure.

Similarly, many provincial-level governments are stepping up preparatory work for projects eligible to apply for special local government bonds for the coming year, indicating that the role of such bonds as a catalyst of investment is being fulfilled. Will happen

Gao Ruidong, chief economist at Everbright Securities, said the time for issuing special local government bond quotas for next year came earlier this year and the size has increased. Usually comes around December. Based on the special bond quota received by Fujian province, Gao estimates that the total amount of special bonds to be issued ahead of schedule could be around 2 trillion yuan.

These early issuance steps came months after the State Council’s executive meeting insisted in August that the remainder of the special bond quota of more than 500 billion yuan be put to good use by law, and in October. It is expected to be released in late 2015 and will help promote effective investment, increase consumption and address the problem of insufficient credit demand.

Also read  Estee Lauder Companies acquires Tom Ford brand in $2.8 billion deal

“With Fujian announcing such precise timing and quotas for bond issuance, it means that special local government bonds will play an integral role in stabilizing growth,” said Gao.

He said an early issuance of special local government bonds would help stabilize the economy in the first half of 2023.

“The early issuance of these bonds, compared to last year and 2020, reflects the consistency of fiscal policy. It also helps local governments with project reserves so that special bonds can be issued and used earlier in 2023. can be inserted.” told.

Gao said that in the fourth quarter and next year, special local government bonds will actively drive growth in areas such as new infrastructure.

China’s finance ministry said in a November 5 announcement that special local government bonds worth more than 3.54 trillion yuan were issued in the first nine months. In the January-September period, local government bonds were issued at an average interest rate of 3.03 percent.

The ministry said China’s outstanding government debt was about 34.71 trillion yuan at the end of September, well within the official limit of 37.65 trillion yuan for this year.

Li Keobo, deputy director of Tsinghua University Academic Center for Chinese Economic Practice and Thinking, said the role of these special bonds was more inescapable this year than in the past two years, with property sales and taxes falling. on additional companies. The rate cuts have put pressure on local governments.




Leave a Comment