China is set to issue special bonds aimed at revitalizing its struggling economy, marking a significant initiative to support banks, boost the property market, and ease local government debt. This effort represents one of the most substantial economic support packages the country has implemented in years.
The issuance of these special bonds is part of a broader strategy by Beijing to tackle the ongoing crisis in the property sector and persistently low consumer spending, both of which have hindered the world’s second-largest economy.
These special bonds are designed to enhance capital availability for banks, encouraging them to increase lending and, in turn, stimulate sluggish consumer demand. Additionally, local governments will be allowed to borrow more funds to purchase unused land, which is expected to help revitalize the struggling property market.
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While specific figures related to the special bonds were not disclosed during a press conference led by Finance Minister Lan Fo’an, he indicated that there is still room for the country to “issue debts and increase the deficit” to support these initiatives.
Officials are working hard to reverse the economic slowdown and meet a growth target of 5% for the year. This target, while attractive compared to many Western nations, is a far cry from the double-digit growth rates that characterized China’s economy in the past.
Lan highlighted that Beijing is “accelerating the use of additional treasury bonds” and will also issue ultra-long-term special treasury bonds. He mentioned that in the upcoming three months, around 2.3 trillion yuan in special bond funds could be allocated for various projects.
The government also plans to issue bonds specifically to support large state-owned commercial banks, although the exact amounts remain unspecified. Authorities are urging these banks to increase lending and reduce mortgage rates, which would provide consumers with more financial flexibility.
The special bonds will help strengthen banks’ capital positions, allowing them to lend more effectively. Additionally, local governments will receive special bonds that enable them to acquire unused and idle land for development, helping to alleviate financial pressures on both local authorities and real estate companies.
Furthermore, Beijing is encouraging the purchase of existing commercial properties to be converted into affordable housing, aiming to further support the housing market.
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