File photo shows a worker counts Chinese currency Renminbi (RMB) at a bank in Linyi, east China's Shandong Province. (Xinhua/Zhang Chunlei)

China’s first batch of government bonds for 2024 was issued on Wednesday, with local government bond issuance also set to commence soon. Experts noted that the total national bond issuance for the entire year is expected to surpass 9 trillion yuan ($1.27 trillion), which will stimulate effective investments and solidifying the momentum of economic recovery.

The Ministry of Finance (MOF) plans to issue a total of 41 tranches of various types of government bonds in the first quarter, with the first issue scheduled for Wednesday, according to a ministry plan

Assuming the 2024 GDP growth target remains at 5 percent, and considering three scenarios with annual budget deficit ratios set at 3 percent, 3.5 percent, and 3.8 percent of the GDP, the estimated bond issuances would be around 9.41 trillion yuan, 10.04 trillion yuan, and 10.42 trillion yuan, respectively, the China Securities Journal reported, citing Xu Liang, Topsperity Securities Co’s chief analyst.

Issuing government bonds is a crucial means to increase investment in infrastructure projects, Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Thursday.

Investment in infrastructure not only creates job opportunities but also has an immediate positive impact on stabilizing economic growth, Yang said.

The MOF issued a total of 190 tranches of government bonds in 2023, amounting to a total issuance of 11.1 trillion yuan. This represents a significant increase from the previous year, according to media reports.

In October 2023, China announced plans to issue 1 trillion yuan in special government bonds to support the rebuilding of disaster-hit areas and raise the country's disaster prevention capabilities. The bonds will be transferred to local governments. A total of 500 billion yuan will be used in 2023, and another 500 billion yuan will be used in 2024.

In an interview with Xinhua News Agency, Wang Jianfan, the head of budget department at MOF, said that the country will make good use of its fiscal policy, coordinate fiscal resources, and improve policy tools to enhance support for the economy, prioritizing high-quality development and pushing forward Chinese modernization.

Wang said the country will maintain an appropriate level of fiscal spending by leveraging policy tools such as the additional issuance of treasury bonds, local government bonds and local government special bonds.

The debt ratio of China's central government is still relatively low, and there is still significant room for issuing government bonds to boost investment and stimulate consumption, Yang said.

At the same time, local government bonds have also been poised for issuance soon.

As of January 5, 18 local governments have disclosed their bond issuance plans for the first quarter of 2024, with a total disclosed amount of 954.9 billion yuan in the pipeline. Among these, new bonds amount to 605 billion yuan, while refinancing bonds total 349.9 billion yuan. General bonds amount to 274.3 billion yuan, and special-purpose bonds reach 680.7 billion yuan, according to data compiled by Zhongtai Securities.


Global Times