China‘s Finance ministry plans to issue about 2.5 trillion yuan ($347.4 billion) in treasury bonds in the fourth quarter to help underpin the slowing economy, two sources have revealed.
It also plans a $42bn support package in infrastructure loans, the Securities Times said on Thursday.
Policymakers are gearing up to bolster the economy hobbled by strict Covid curbs and a property crisis after it narrowly escaped a contraction in the June quarter.
The treasury bond issuance plan was made during a meeting of the ministry on Wednesday, the sources said.
The ministry has also urged local governments to complete issuing about 500 billion yuan in special bonds by the end of October under quotas from previous years, they said. The ministry did not immediately respond to a request for comment.
The planned issuance is expected to jump 21% from the issuance of 2.06 trillion yuan in government bonds in the same quarter a year earlier.
Amid weak consumption recovery and softening exports growth, authorities are doubling down on an infrastructure push, dusting off an old playbook by issuing debt to fund big public works to revive the economy.
The issuance of some of 3.45 trillion yuan in local government special bonds for infrastructure was completed by the end of June.
Also on AF: Asia Has Rebounded But China Has ‘Lost Momentum’: World Bank
Infrastructure Loans
Meanwhile, China also allocated additional funding support for infrastructure projects on Wednesday, the official Securities Times reported on Thursday.
The support package totals $42 billion of loans, which will be made available through three state banks, the state news outlet said.
The intervention is a further attempt to revive the country’s lagging economy, which is set for slower growth than the surrounding Asian regions for the first time since 1990.
On August 24, China’s cabinet offered another slew of stimulus to revive the economy. One of the moves is raising the quota on policy financing tools by $42 billion.
As well, funds from over $69.5 billion in special bonds, under carry-over quotas from 2019 sold by local government, will also be used for infrastructure projects in the fourth quarter to ensure growth in infrastructure investment of around 10% for the whole year, the newspaper said.
China‘s economy generally recovered and stabilised in the third quarter and the country will push ahead with its economic programme in the fourth, state media quoted Premier Li Keqiang as saying on Wednesday.
But with few signs China will significantly ease its zero-Covid policy soon, many analysts expect the economy to grow by just 3% this year, which would be the slowest since 1976, excluding the 2.2% expansion during the Covid pandemic first hit in early 2020.
- Reuters, with additional editing from Alfie Habershon and Jim Pollard
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