Select Language:
Over the past six months, local authorities across China have issued a total of CNY52 billion (roughly USD7.4 billion) in special bonds to fund local innovation projects focused on science and technology.
Since June, nine regional governments have successfully issued these bonds, which were then used to replenish investment funds dedicated to supporting science and technology advancements. Data from the China Bond Information Network indicates these funds are invested in cutting-edge technology startups and innovation sectors.
The bonds, with maturities ranging from 10 to 20 years, are incorporated into local government investment budgets. As a result, credit rating agencies have assigned them top-tier AAA ratings.
For example, Anhui Province plans to channel the proceeds into Hefei Venture Capital, ensuring sustained financial backing for early-stage tech companies and sectors involving advanced manufacturing.
Additionally, the Shenzhen municipal government announced plans to issue CNY6.5 billion (around USD922.6 million) worth of bonds with a decade-long maturity on November 24.
Given the slowdown in economic growth, local governments are experiencing lower growth in fiscal revenue and rising expenditure pressures. This has pushed them to explore new financing avenues for their investment funds, according to Wu Zhiwu, a senior R&D researcher at CSCI Pengyuan.
Compared to other funding options like insurance investments and bank loans, issuing special bonds offers notable benefits, including lower borrowing costs. As Wu explains, because these bonds are backed by guarantees on principal and interest repayment, local governments have more freedom in choosing investment targets—supporting broader policy objectives more effectively.
ChatGPT
Perplexity
Gemini AI
Grok AI
