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China has completed the distribution of this year’s final installment of its CNY1.3 trillion (USD182.1 billion) quota for ultra-long-term special treasury bonds. On the same day, the Ministry of Finance announced the sale of CNY40 billion (USD5.6 billion) worth of 20-year bonds, offering a coupon rate of 1.92 percent and an issue price of CNY95.41 (USD13.36).
Last year, China reintroduced these special treasury bonds to help counter growing economic headwinds, issuing a total of CNY1 trillion. Notably, both the first and last batches of issuances this year were completed over a month earlier than in previous years.
While it’s unlikely that China will exceed its current quota for ultra-long-term bonds this year, many expect the country to sell more than CNY1 trillion worth of such bonds in the coming year, according to Wen Laicheng, a professor at the Central University of Finance and Economics.
Overall, the issuance of these bonds has gone smoothly, attracting strong investor interest. This has allowed the government to raise funds efficiently at relatively low costs, playing a crucial role in supporting stable economic growth.
Amid challenges like weak domestic demand, complex external conditions, and rising downward pressure, the issuance and use of funds from ultra-long-term bonds are vital tools for maintaining economic stability and social order. These bonds, ranging from 20 to 50 years, serve as an important policy instrument to stimulate investment and consumption, drive industrial demand, and bolster economic momentum. The proceeds primarily support large infrastructure projects, corporate equipment upgrades, and the trade-in of outdated consumer goods.
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