China plans to sharply increase funding from ultra-long treasury bonds in 2025 to boost business investment and consumer spending, as policymakers aim to revitalize the economy. The government will use special treasury bonds to fund large-scale equipment upgrades and consumer goods trade-ins.
According to Yuan Da, deputy secretary-general of National Development and Reform Commission (NDRC), the size of ultra-long special government bond funds will be increased this year to intensify and expand the implementation of initiatives aimed at boosting consumption. Households will also be eligible for subsidies to buy digital products such as cell phones, tablets, smart watches, and bracelets.
The government has allocated 1 trillion yuan ($136.68 billion) from ultra-long special treasury bonds in 2024, with about 70% financing “two major projects” and the remainder going towards new initiatives. China’s leaders have pledged to “vigorously” boost consumption this year, raising expectations of more policy steps.
In addition, the government will also increase funding from special treasury bonds and expand support for key strategic sectors. Projects worth 100 billion yuan under this scheme have been approved in advance, focusing on construction of railways, airports, development of farmland, and building security capacity.
China’s economy has struggled over the past few years due to a severe property crisis, high local government debt, and weak consumer demand. The government is likely to allow local governments to issue special bonds worth 4.7 trillion yuan this year, up from 3.9 trillion yuan in 2024.
The combined effect of special treasury bonds, local bonds, and the annual budget deficit could approach 13 trillion yuan this year, or 9-10% of gross domestic product. Chinese leaders have agreed to raise the budget deficit to 4% of GDP in 2025, while maintaining an economic growth target of around 5%.
Source: https://www.reuters.com/world/china/china-will-sharply-increase-funding-treasury-bonds-spur-growth-2025-2025-01-03