China is taking decisive steps to bolster its economic recovery by enhancing the role of government investment. On September 26, the Political Bureau of the Central Committee convened to assess the current economic landscape and outline strategic fiscal policies aimed at sustaining growth and stability.
The meeting highlighted the importance of intensifying countercyclical adjustments in both fiscal and monetary policies. The government is committed to ensuring essential fiscal expenditures, meeting basic living needs, and maintaining smooth governmental operations at the primary level. A key focus is the effective utilization of ultra-long-term special treasury bonds and special local government bonds to drive development.
In line with these goals, the Ministry of Finance announced on October 12 a series of targeted fiscal measures designed to promote high-quality economic development. This includes issuing one trillion yuan ($141 billion) of ultra-long-term special treasury bonds and 3.9 trillion yuan of special-purpose bonds. These bonds are intended to support large state-owned commercial banks in strengthening their core capital and to stabilize the property market.
As of September 25, approximately 3.6 trillion yuan of the new special-purpose bonds had been issued, with an additional 300 billion yuan pending. The total outstanding special bonds stand at around 28.2 trillion yuan, nearing the ceiling of 29.5 trillion yuan. The issuance of the ultra-long-term special treasury bonds is expected to be completed by mid-November.
Despite vigorous efforts, the issuance of special bonds has faced challenges such as stringent yield requirements, limited viable infrastructure projects, and financial constraints at the local government level. Additionally, issues with project management and regulatory oversight have hindered the efficient allocation of funds.
To address these obstacles, the Ministry of Finance has proposed expanding the scope of special bond usage. This includes supporting the acquisition of land reserves, enhancing government-subsidized housing, and investing in infrastructure for strategic emerging industries. These measures aim to optimize the management and deployment of special bonds, ensuring that government investment effectively stimulates economic growth and stabilizes key sectors.
Reference(s):
cgtn.com
