Chinese yuan Photo:VCG

Local Chinese governments are accelerating issuance of special-purpose bonds, as South China’s Guangxi Zhuang Autonomous Region made the latest move to issue a total of 12.5-billion-yuan ($1.71 billion) worth of bonds on October 30. 

A total of 22 Chinese provinces, autonomous regions and municipalities have recently unveiled plans to issue bonds worth of 956.28 billion yuan. 

Guangxi announced the planned issuance on October 23 which will be used to pay off past debt, the paper.cn reported. On October 9, the region disclosed its proposed issuance of special-purpose refinancing bonds for the first time of 49.8 billion yuan. The region became the fifth one in China to complete a second round of bond issuance.

Among the 22 Chinese provinces, autonomous regions and municipalities which have disclosed plans to issue special-purpose refinancing bonds since October 6, Southwest China’s Yunnan Province and North China's Inner Mongolia Autonomous Region announced to issue the special-purpose bonds worth more than 100 billion yuan, 107.6 billion yuan and 106.7 billion yuan, respectively, according to the paper.cn report.  

Unlike refinancing bonds where the proceeds are used to repay the principal of maturing government bonds, the proceeds of special refinancing bond are used to replace local hidden debt.

The issuance of special-purpose refinancing bonds will help maintain liquidity and capital turnover, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Tuesday. 

Xi added that local fiscal revenues will increase as the economy continues to recover, which will help ease their financial pressure. 

In the first eight months of 2023, local government bond issues stood at 6.30 trillion yuan, according to data from the Ministry of Finance. As of the end of August, the total balance of China's local government bonds stood at 38.75 trillion yuan, within the limit approved by the National People's Congress, the country's top legislature, of 42.17 trillion yuan.

Global Times