China is planning to issue a record-breaking $411 billion worth of special treasury bonds next year, according to two sources. This would be the highest on record and aims to boost consumption, innovation, and recapitalize state banks. The funds will be used for initiatives such as subsidy programs, equipment upgrades, and investments in advanced sectors.
The planned issuance is a sharp increase from this year’s 1 trillion yuan and comes as Beijing moves to soften the blow from expected US tariffs on Chinese imports. The sources declined to be identified due to sensitivity of the matter.
The State Council Information Office did not immediately respond to a Reuters request for comment. China’s 10-year and 30-year treasury yields rose after the news, indicating market expectations.
The issuance would be the largest on record and underscores Beijing’s willingness to go deeper into debt to counter deflationary forces in the economy. It is seen as a positive development by analysts, providing incremental support for growth.
About 1.3 trillion yuan of funds will be raised through long-term special treasury bonds, which will fund “two major” and “two new” programs. The “new” initiatives include a subsidy program for durable goods and equipment upgrades for businesses.
The state planner NDRC said Beijing had fully allocated all proceeds from this year’s 1 trillion yuan in ultra-long special treasury bonds, with about 70% of proceeds financing the “two major” projects and the remainder going towards the “two new” schemes.
The planned issuance is part of China’s efforts to revive a faltering economy and address concerns around exports, which could face US tariffs in excess of 60%. The funds will also be used for investments in advanced manufacturing, such as electric vehicles and green energy.
President Xi Jinping gathered with top officials to chart the economic course for 2025, which includes raising the fiscal deficit ratio and issuing more government debt next year.
Source: https://www.reuters.com/world/china/china-plans-411-bln-special-treasury-bond-issuance-next-year-sources-say-2024-12-24