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China’s local governments have nearly finished issuing this year’s newly approved bonds, with total issuance reaching approximately CNY5.3 trillion (around USD750.9 billion) as of yesterday, based on publicly available data.
The total bond quota allocated for local government issuance this year is CNY5.4 trillion, and about 98% has already been issued. The rapid pace of issuance highlights strong demand for funding to support infrastructure and development projects, as these bonds have become a primary financing source amid ongoing challenges in local fiscal revenue and expenditure.
The five provinces with the highest economic output account for roughly CNY1.8 trillion of the total, or approximately 34%. Guangdong province, excluding Shenzhen, issued about CNY496.6 billion (USD70.4 billion) in new bonds this year. Following are Shandong province (excluding Qingdao) with CNY366.7 billion, Zhejiang province (excluding Ningbo) with CNY342.9 billion, Jiangsu province with CNY310.1 billion, and Sichuan province with approximately CNY281.8 billion.
Wealthier provinces tend to secure larger bond quotas thanks to their stronger fiscal capacity, numerous major projects, and comparatively lower debt risks. Additionally, the approval process for special bond projects has been more efficient this year in these regions. The central government launched a pilot program across ten provinces to decentralize approval authority for certain bond projects, allowing these projects to receive approval at the provincial level without requiring further review by the national development and reform authorities or the finance ministry.
Although local government bond issuance has surged in recent years, increasing total debt levels, issuance has remained within approved ceilings, and overall debt risks are considered manageable. Data from the finance ministry indicate that, by the end of October, outstanding local government debt was approximately CNY54.01 trillion (about USD7.65 trillion), staying below the maximum limit of CNY57.99 trillion authorized by the national legislature.
Additionally, data show that by the end of October, investors in the interbank bond market held about CNY51 trillion of local government bonds. Commercial banks held around CNY37 trillion, accounting for about 69% of these holdings — a share that has decreased in recent years as the investor base has diversified.
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