China's local government bond issuance reached 2.84 trillion yuan (about 390.6 billion U.S. dollars) in the first quarter of this year, marking an over 80 percent year-on-year increase and setting a new record.
The issuance and usage of local government bonds have become a key driver in boosting domestic demand.
In terms of issuance structure, the largest portion is the 1.47 trillion yuan refinancing special bonds, which are to replace existing debts. They took up 52 percent of the total.
Since this year, the scale of implicit local debts in several places has seen a decline. Especially in provinces like Jiangsu, Jilin, Qinghai, and Hunan, their implicit debts were fully cleared; Other regions completed their annual replacement quota.
"Dissolving implicit debts follows last year's plan. So far, this year's debt issuance has proceeded over 50 percent, clearing some problems in China's economic cycle," said Luo Zhiheng, chief economist of Yuekai Securities.
On the other hand, in the first three months of 2025, new special bond issuance for infrastructure came in at nearly 960.3 billion yuan (132.8 billion U.S. dollars), up 51 percent year on year.
From the capital allocation perspective, the focus is on areas such as municipal and industrial parks, rail transit, and land reserves.
The issuance of new local special bonds has been accelerated, facilitating the improvement of available funds and the advancement of projects.
"In the first quarter, the Chinese economy was off to a good start, thanks to the accelerated issuance and use of local government bonds, which boosted the recovery of infrastructure investment. The usage structure and purpose of special bonds have become more diverse, conducive to China's demand expansion and supply structure optimization," Luo said.
China's local gov't bond issuance hits new high in Q1
