A highway to Wuhan, Central China’s Hubei Province is under construction in Anqing, East China’s Anhui Province on March 28, 2022. With major infrastructure projects kicking off across multiple provinces in China, fixed-asset investment is on a fast track, and it's expected to drive economic growth. Photo: cnsphoto

Local governments in China issued 439.9 billion yuan ($61.6 billion) in new special-purpose bonds in October, up from 24.1 billion yuan in September and 51.6 billion yuan in August, as the country accelerates fundraising to shore up the economy amid a conflux of headwinds ranging from COVID-19 flare-ups to global geopolitical uncertainties.

In the first 10 months of 2022, these issues totaled 3.98 trillion yuan, data released by China's Ministry of Finance revealed on Wednesday. That means the annual quota has been completed in advance.

According to the central government's work report this year, the quota of special-purpose bonds for local governments was set at 3.65 trillion yuan for 2022, the same as last year.

In September, the State Council, the country's cabinet, pledged to finish the issuance of 500 billion yuan of special-purpose bonds from local governments' previously unused quotas since 2019 by the end of October. In the first nine months, new issuances stood at 3.54 trillion yuan, the data showed.

These special-purpose bonds were first issued in 2015, and the quota was set at the maximum of 3.75 trillion yuan in 2020, the first year of the COVID-19 pandemic. They are regarded as an important tool for effective investment in such sectors as transportation infrastructure, energy, environmental protection and government-subsidized housing projects in order to stabilize economic growth.

Analysts said this year, the issuance of special bonds was done three months ahead of previous years, providing a strategic window for policymakers to strengthen counter-cyclical adjustments and launch more incremental pro-growth policies.

Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Wednesday that the volume of these special-purpose bond issuances is about five times that of general bonds, which underscores "the goal of the government to further stimulate infrastructure investment amid softened demand at home and abroad."

Dong noted that China's overall government debt level is sustainable and within control compared with other economies, and won't likely create a burden for local governments.

It is widely expected that Chinese policymakers may frontload a new special-purpose bond quota for next year in the fourth quarter of 2022 - following a similar move in 2021 — amid the government's stepped-up efforts to boost economic growth next year.

In December 2021, the Ministry of Finance allocated 1.46 trillion yuan from its 2022 quota for local government special bonds.

In the first 10 months, China's fixed-asset investment expanded 5.8 percent, latest data from the National Bureau of Statistics showed. For the January-October period, 97 fixed-asset investment projects worth 1.4 trillion yuan were approved.

Global Times