Chinese yuan Photo:VCG

China on Friday issued 50-year ultra-long special treasury bonds, the first batch this year, at the Beijing Stock Exchange worth a total sum of 35 billion yuan ($4.82 billion) with an interest rate of 2.53 percent, with oversubscription for the bonds pointing to strong enthusiasm from institutions. 

As an important part of the country's proactive fiscal policies, the issuance will further elevate market confidence and expectations, and better support economic growth in the short term and high-quality development in the long term, analysts said.

This is China's first issuance of the 50-year ultra-long special treasury bonds this year. Similar bonds with terms of 30 years and 20 years started to be issued on May 17 and 24, respectively, and were welcomed by investors. The issuance will be completed by mid-November this year.

The issuance of this year's ultra-long special treasury bonds is taking place in an orderly fashion, while their interest rate is based on market-oriented competitive bidding, making such bonds popular among investors, Chen Fengying, an economist and former director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations, told the Global Times on Friday.

Chen said that the issuance of ultra-long special treasury bonds brings benefits to short-term economic growth and builds the foundation for long-term high-quality development.

China plans to issue such bonds in each of the next several years, sending a positive signal that proactive fiscal policy will better support the country's economic development, Wen Bin, chief economist from China Minsheng Bank, told the Global Times.

He said that ultra-long special treasury bonds will help alleviate local governments' debt pressure and support infrastructure investment, and thereby boost economic growth. The development of key projects will in turn help reduce the costs of economic and social activities, raise economic efficiency and improve supply structure, according to Wen.

A meeting of the Political Bureau of the Communist Party of China Central Committee on April 30 said that the country should front-load efforts to effectively put the established macro policies in place, and well implement a proactive fiscal policy and a prudent monetary policy. Specifically, the meeting stressed that ultra-long special treasury bonds should be issued at an early stage and put in good use, while the issuance and utilization of special-purpose bonds should be expedited, according to Xinhua.

Recently, multiple provincial governments, including that of Southwest China's Sichuan, South China's Hainan and Central China's Hunan provinces, have held meetings to arrange tasks related to the ultra-long special treasury bonds. In a recent meeting, the Sichuan provincial government pledged efforts to reserve a batch of key projects in line with the 14th Five-Year Plan (2021-25) and regional development plan, so as to lay a solid foundation for sustained support from the ultra-long special treasury bonds.

Analysts said that the steady issuance of ultra-long special treasury bonds will offer strong support for the construction of long-term projects and the implementation of national key strategies, and its positive effects on domestic demand will gradually emerge, injecting new impetus into the economic rebound.

Recently, many international organizations have raised their forecasts for China's economic performance, fully demonstrating the international community's confidence in the country's economic growth. The World Bank on Tuesday raised China's 2024 economic growth forecast from 4.5 percent to 4.8 percent, citing stronger-than-expected goods exports and other economic activities in China.

Chen said that it should be noted that China still faces some temporary difficulties and challenges, including a lack of effective demand, weak social expectations, and an external environment that is increasingly complex and uncertain.

However, those challenges cannot hinder the Chinese economy, analysts said. China is able to handle difficulties and challenges and promote high-quality development by acting on the principle of seeking progress while maintaining stability, promoting stability through progress, establishing the new before abolishing the old, and deepening reforms, they added, referring to the tone of economic policy set by the Central Economic Work Conference in December 2023.

As the competitiveness of China's goods exports continues to rise, the country's foreign trade will continue to maintain resilience, Wen said, stressing that the economy is still maintaining steady growth momentum.