China’s record annual limit for infrastructure-boosting bonds to be spent by October
- Local governments are scrambling to sell more than US$500 billion worth of special-purpose bonds that will mostly fund construction projects and boost China’s economic growth
- But the spending spree has raised concerns that debt levels could become an outsized threat as they have in the past, even as Beijing says it is trying to prevent that
To spur infrastructure-fuelled economic growth in the face of a property-market crisis and mounting debt pressure, local governments across China are expected to use up a record annual quota on special-purpose bond sales with months left on the calendar.
For all of 2023, China’s local governments were allocated an all-time-high quota of 3.8 trillion yuan (US$521 billion) worth of such bonds, which are often used to finance large-scale construction projects.
In a report to the Standing Committee of the National People’s Congress in Beijing on Monday, Finance Minister Liu Kun said that the goal is to complete the issuance of the entire 2023 quota by September, with the designated proceeds spent by the end of October.
Liu also acknowledged that there had been some difficulties and problems in terms of fiscal operations and budget execution, but he didn’t specify what those issues were, according to a report by Xinhua News on Monday.
“[We will] strengthen special-purpose-bond project reserves and post-investment management, and implement relevant tax and fee support policies,” Liu said, adding that fiscal, monetary and other policies would be coordinated to maximise the results.
And all the while, he said, efforts would be taken to curb local government debt risks.
