Chinese local governments nearly complete special bonds issuance quota in H1

CHINA'S local governments issued around 3.41 trillion yuan (S$699.4 billion) in special bonds in January-June, the finance ministry said on Tuesday (Jul 26), approaching the quota that Cabinet asked them to complete to spur infrastructure.

The net issuance accounts for about 98.8 per cent of the 3.45 trillion yuan in special bond issuance for infrastructure - part of the 2022 special bond quota of 3.65 trillion yuan which China's Cabinet asked local governments to complete by the end of June.

As the world's second-biggest economy was hit badly by stringent Covid lockdowns this year, policymakers eyed infrastructure investment to help stabilise the economy.

In June alone, local governments issued a net 1.37 trillion yuan in special bonds, more than twice the amount of such bond issuance in May.

The finance ministry had asked local governments to complete the usage of the raised funds by the end of August.

The local government special bond issuance in the first half of this year has supported more than 23,800 projects, and the ministry will supervise the usage of such special bond issuance in the second half of the year, Song Qichao, a finance ministry official, told a news conference in mid July.

As headwinds to economic growth persist, including a beleaguered property sector, soft consumer spending and fear of recurring waves of infections, China will set up a state investment fund worth 500 billion yuan to spur infrastructure spending, Reuters previously reported.

Sources also said that China will issue 2023 advance quota for local government special bonds in the fourth quarter, with the new quota likely bigger than the 1.46 trillion yuan for 2022. REUTERS