An aerial drone photo taken on Jan. 11, 2024 shows vessels passing through the five-tier ship locks of the Three Gorges Dam in Yichang, central China's Hubei Province. The cargo throughput via the Three Gorges Dam, the world's largest hydropower project on the upper stream of the Yangtze River, reached a record high of 172.34 million tonnes in 2023, up 7.95 percent year on year, according to the China Three Gorges Corporation.(Photo: Xinhua)

China plans to systematically address funding shortages facing some major projects in the course of advancing the national rejuvenation, and it will issue ultra-long special treasury bonds starting this year and over each of the next several years, Chinese Premier Li Qiang said in his Government Work Report delivered to the annual session of the National People's Congress (NPC) on Tuesday.

The proceeds from the bond issuance will be used to implement major national strategies and build up security capacity in key areas. One trillion yuan ($139 billion) of such bonds will be issued in 2024, read the report.

“Additional government investment is needed in many sectors this year. This means that we should further improve the structure of government spending, ensure sufficient funding for major national strategic tasks and efforts to meet the people’s basic living needs, and strictly control general expenditures,” Li said.

“We should appropriately enhance the intensity of our proactive fiscal policy and improve its quality and effectiveness,” Li stressed.

China will set the deficit-to-GDP ratio in 2024 at 3 percent and the government deficit at 4.06 trillion yuan, an increase of 180 billion yuan over the 2023 budget figure.

“It is projected that fiscal revenue will continue to grow in 2024 and we will also have funds transferred from other sources; on this basis, general public expenditures in the government budget are projected to reach 28.5 trillion yuan, an increase of 1.1 trillion yuan over last year,” Li said.

This year, 3.9 trillion yuan of special-purpose bonds for local governments will be issued, an increase of 100 billion yuan over last year, according to the Government Work Report.

Ultra-long special treasury bonds are a fiscal policy instrument geared towards the long haul. Given their extended maturity, the bonds are predominantly directed towards foundational, large-scale infrastructure projects that address deficiencies and reinforce long-term capabilities, experts said.

This year’s fiscal policy, including the issuance of the ultra-long special treasury bonds, is poised to play a crucial role in supporting stable economic operations and will provide financial backing for some of the key projects in the process of national rejuvenation and the construction of a great country, Yang Chang, chief analyst of Zhongtai Securities, told the Global Times on Tuesday.

Issuing the long-term treasury bonds can help avoid large fluctuations in fiscal expenditures. This is particularly important given the current challenges faced by some local governments, which lack stable financial means to promote economic development, especially amid the structural adjustment in local debt and the real estate sector, Tian Yun, an economist based in Beijing told the Global Times on Tuesday.

Moreover, China's long-term government bonds are relatively popular among investors. China should take advantage of the current low inflation and low financing costs to ramp up their issuance, Tian said.

“Considering the current risks domestically and internationally, we should be comprehensively prepared. The government could expedite the issuance of the one-trillion-yuan ultra-long special treasury bonds,” Tian said.

In 2023, an additional one trillion yuan of special treasury bonds was issued to support post-disaster recovery and reconstruction and build up capacity for disaster prevention, mitigation and relief.

Lou Qinjian, spokesperson for the second session of the 14th NPC, told at a press conference on Monday that the one-trillion-yuan treasury bond issuance for 2023 has been fully allocated, supporting over 15,000 projects. It will effectively ensure and improve the livelihoods of the people in disaster-affected areas.

Global Times