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Shandong Province in eastern China announced the issuance of this year’s first batch of local government special-purpose bonds today, totaling 72.3 billion yuan (roughly $10.3 billion). This marks the beginning of what is expected to be a nationwide wave of bond issuance this year, amounting to hundreds of billions of dollars, primarily aimed at boosting local infrastructure development.
So far, 27 regional governments and major cities, including Shandong, have revealed their plans for bond sales during the first quarter of 2026, with total planned issuance around 2 trillion yuan (approximately $286.4 billion), according to a corporate early warning network.
China’s annual allowance for local government special-purpose bonds typically needs approval from the National People’s Congress in March. However, since 2019, the State Council has been authorized by the NPC Standing Committee to release part of the upcoming year’s quota early, allowing local authorities to begin issuing bonds sooner and support economic growth more promptly.
Over the past two years, pre-allocated bond quotas from the Ministry of Finance have usually been around 60% of the previous year’s total. Based on this ratio, the pre-allocated amount for this year could reach 3.1 trillion yuan (approximately $446.7 billion), providing ample funding for infrastructure projects at the start of the year and supporting the government’s fiscal policy goal of front-loading financial support.
Today’s issuance by Shandong also included 46.7 billion yuan (about $6.7 billion) in new special-purpose bonds, along with 25.6 billion yuan (around $3.6 billion) in refinancing bonds designed to replace hidden local government debt. This signals the official start of this year’s nationwide issuance of 2 trillion yuan (roughly $286.4 billion) in refinancing special-purpose bonds.
Local government bonds are categorized into two types: new bonds, primarily funded for public welfare projects with stable returns; and refinancing bonds, used to pay back principal and interest on maturing bonds, including special refinancing bonds approved by the NPC Standing Committee to replace hidden debts.
In the first quarter of 2025, local governments issued a total of 2.8 trillion yuan (about $400.9 billion) in special-purpose bonds, with approximately 1.2 trillion yuan (roughly $171.8 billion) in new bonds and 1.6 trillion yuan (around $229.1 billion) in refinancing bonds, according to previous data from the Ministry of Finance.
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