China has made noteworthy progress in supporting local economy through the issuance of bonds, according to the Ministry of Finance on Monday.
In March this year, China unveiled an action plan to implement the renewal program of promoting large-scale equipment upgrades and consumer goods trade-ins in an effort to enhance domestic demand and shore up the economy. It further stepped up policy support in July with an extra funds injection of 300 billion yuan (about 42.5 billion U.S. dollars) via ultra-long special treasury bonds.
The ministry announced on Monday that so far the 300 billion yuan of ultra-long special treasury bonds has all been allocated to local governments.
At the same time, the ministry worked together with other departments involved and issued detailed implementation rules for different fields to clarify the negative list of the use of funds for the renewal program.
With the fiscal support for the renewal program in place, from January to October, the investment in equipment and tools increased by 16.1 percent year-on-year, driving the growth of total investment by 2.1 percentage points. The total retail sales of consumer goods in October increased by 4.8 percent year-on-year, 1.6 percentage points faster than in September.
The ministry also updated the progress in issuing new local government special bonds.
Data shows that as of the end of October, local governments had issued a total of 3.9 trillion yuan in new local government special bonds, with an issuance progress of 98 percent.. Among them, 2.1 trillion yuan was issued from August to October, exceeding the total issuance from January to July. Specifically, it was invested in more than 30,000 projects with strong economic and social benefits, which promoted the stable development of local economy and society.
On Nov 8, the Standing Committee of the National People's Congress reviewed and approved an increase of 6 trillion yuan in local government debt limits to replace existing hidden debts. On Nov 9, the Ministry of Finance had issued the new 6 billion-yuan debt limits to all localities, and some provinces have started the issuance work to speed up the implementation of the policy.
China makes progress in supporting local economy through issuing bonds
