Guangzhou (JLC), October 26, 2023 – China is set to issue an additional CNY1 trillion (USD136.93 billion) of special treasury bonds in the fourth quarter (Q4) of 2023, state news agency Xinhua reported on October 24.
The plan of issuing new bonds, proposed by the State Council, was approved by China's top legislature on October 24.
The funds raised through the treasury bonds will be allocated to the local governments via transfer payment, Xinhua said.
The funds will be largely used in eight aspects, including post-disaster reconstruction, flood prevention, natural disaster emergency response, and projects related to prevention of flood and other natural disasters, according to the Ministry of Finance.
In breakdown, CNY500 billion is planned to be used in Q4 2023, while the remaining half of CNY1 trillion will be utilized next year.
The new issuance of treasury bonds will bring China’s nationwide deficit to CNY4.88 trillion in 2023, driving up its deficit-to-GDP ratio from 3% to 3.8%, it said.
The ministry said it will timely launch the bond issuance work to ensure completion of the issuance on schedule. It will also ensure smooth transfer payment and strengthen regulations so that the funds will be used as planned.
The use of these government-debt funds will help drive domestic demand and further consolidate the economic recovery, Xinhua said.
Given that China's government debt ratio has been lower than other major economies, the overall risk of issuing new bonds is still under control, it said.
