Govt speeds up bond issuance to support high-quality growth

▶ Move shows policymakers’ resolve to boost sentiment

China plans to issue the first batch of 1 trillion yuan ($140 billion) in ultralong-term treasury bonds starting from Friday, as the authorities seek funds to shore up government spending and crucial projects’ investment for high-quality economic development.

The timing of the treasury bonds in 2024 will go from May through November. The bonds will include 20-, 30- and 50-year securities, according to a statement on the website of the Ministry of Finance on Monday.

The issuance comes earlier than expected, underscoring the central government’s resolve to support the economy, analysts said, noting that the move will help stabilize market expectations and elevate market confidence.

The pace of the bond issuance is faster than expected, while the time span is longer than expected too. It is rare in China’s history to issue ultra-longterm government bonds of 30 years or longer, said Xi Junyang, a professor at the Shanghai University of Finance and Economics.

Xi said the move shows that the authorities are appropriately strengthening a proactive fiscal policy to improve its effectiveness, which will play an important role in stabilizing expectations, sparking domestic demand and bolstering the economy.

Since the bonds are ultra-long-term, the central government will only need to pay interests over a relatively long period, while the time to repay the principal will be greatly delayed, which will help improve the country’s fiscal sustainability, according to Xi.

The bonds are being issued by the central government and will help improve the government’s debt structure, said Cao Heping, an economist at Peking University.

Compared with bonds issued by local governments, these special-purpose treasury bonds span decades, with lower costs. As a result, the process will prevent risks caused by excessive local government debt, and expand room for fiscal policy maneuvers for local governments, Cao said.

During this year’s two sessions in March, policymakers said that China plans to issue ultra-long special-purpose treasury bonds in 2024 and in each of the next several years. This year, 1 trillion yuan of such bonds will be issued.

The plan to issue the bonds starting from 2024 is a strategic decision that serves the goal of building China into a great country and rejuvenating the Chinese nation, Zheng Shanjie, head of the National Development and Reform Commission, told a press conference during the two sessions in March.

The funds raised through these bond sales will support scientific and technological innovation, integrated urbanrural development, coordinated regional development, food and energy security, and the high-quality development of the population, Zheng said.