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China plans bond programme to help spur economy: Bloomberg

[SHANGHAI] China is aiming to issue 1.0 trillion yuan (S$227 billion) worth of bonds to fund construction projects to help boost the slowing economy, Bloomberg News reported, quoting unnamed sources.

Two policy banks which lend on government directives, China Development Bank and the Agricultural Development Bank of China, will issue bonds, it said, adding the Postal Savings Bank of China would be the buyer, the report said.

"We believe the government is preparing a large fiscal stimulus package, without which the economy could be heading for a hard landing worse than that experienced in 2008," Shen Jianguang, chief Asia economist at Mizuho Securities Asia in Hong Kong, was quoted by Bloomberg as saying in its report Tuesday.

In 2008, China launched a 4.0 trillion yuan stimulus package to stave off the impact of the global financial crisis, a move widely credited with keeping the economy on track but also causing a risky build-up in local government debt.

China's economy, a key driver of global growth, expanded 7.4 per cent last year, its weakest since 1990, and has slowed further this year, growing 7.0 per cent in each of the first two quarters. The government has targeted annual economic growth of around 7.0 per cent for all of 2015.

The People's Bank of China, the central bank, in June announced its latest cut in interest rates, marking the fourth such move since November to boost lending as a driver for the economy.