RMB Photo: VCG

China is likely to issue 3 to 4 trillion yuan ($423 billion to $565 billion) in special treasury bonds in 2020 to give the coronavirus-hit economy a much-needed shot in the arm, Chinese analysts said.

As of March 31, Chinese local governments have issued 1.08 trillion yuan in new special bonds, up 63 percent year-on-year in terms of the scale. 

The figure accounts for 84 percent of the new quota of the 1.29 trillion yuan special treasury bonds issued so far, Vice Finance Minister Xu Hongcai said at a news briefing of the State Council, China's cabinet, on Friday.

The issuance was completed two and a half months ahead of schedule, according to Xu.

In February, China's Ministry of Finance proposed 1.29 trillion yuan for the 2020 local government special bond quota. But the full-year quota is set to be approved by the National People's Congress during this year's "two sessions."

Xu said that financing from the bonds will be used in major infrastructure projects such as railways, industrial parks, environmental protection, agriculture and water conservation. In particular, capital will also be used to support "new" infrastructure projects in the fields of 5G, data centers, artificial intelligence and the internet of things.

Chinese policymakers are also arranging the issuance of the next batch of local governments' special bonds, which is "of a certain scale," according to Xu. 

"The scale of special bonds this year will surpass that of last year," Xu said. He noted as governments are scaling up macro policy adjustments to blunt the fallout of the COVID-19. 

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University, told the Global Times on Friday that as China's foreign trade slumps amid a standstill in business activities abroad, investment and consumption will serve as major drivers for this year's economic growth.

"China will need to double the amount of special bonds from that of last year to make investment play an equally important role as trade," Dong said. China issued 2.15 trillion yuan in special bonds last year, according to data released by the Ministry of Finance in January.

China issued special bonds for the first time in 2015, with a scale of 95 billion yuan. In 2017 and 2018, the amount was raised to 793.7 billion yuan and 1.35 trillion yuan, respectively. 

As of the end of 2019, China's local government debts totaled 21.31 trillion yuan, with a government debt ratio of 82.9 percent, according to Xu. "The scale of government debt has increased to some extent, but such gains are controllable… And China's government debt ratio is lower than the international alert level," Xu said.