China Studying Allocating New Quota of Local Govt Bonds
Chinese policymakers are studying allocating new quota of local government bonds in advance in 2022, to boost investment and stabilize economic growth, the Ministry of Finance said on Nov.19.
The annual limit of newly issued local government bonds is usually passed by the country's legislature and policy advisers in March, after the "two sessions". But the State Council could be authorized to deliver a part of the quota earlier to accelerate financing for investment projects.
In 2020, after the outbreak of the COVID-19 pandemic, the State Council for the first time announced the allocation of 1.85 trillion yuan ($289.9 billion) of local government bond quota in advance in February.
The ministry will guide local governments to speed up the issuance and use of funds raised by local government bonds, inject the funds into real projects and lift investments at the end of this year and the beginning of next year. The move aims to support local economic and social development activity, a spokesperson from the Ministry of Finance told China Daily on Nov.19.
"Considering the whole picture of the macroeconomic situation, we are studying issuing a new debt quota for local governments in 2022 in advance," the spokesperson said.
By the end of October this year, local governments issued a total of 3.5 trillion yuan new bonds, among which 2.76 trillion yuan were special bonds especially for infrastructure projects to drive up investment, the Ministry of Finance said. By far, this completed 76 percent of the annual issuance of local government special bonds.
In the first 10 months, the general public budgeted revenue increased by 14.5 percent year-on-year, which is in line with expectations, and the fiscal revenue growth maintained a recovery, said the finance ministry.
In October alone, the fiscal revenue decreased by 0.1 percent from a year earlier, as the tax revenue dropped by 2.2 percent on a yearly basis, mainly because of the preferential tax policies that released the cost burden of the corporate sector, it added.
From January to October, the budgetary fiscal expenditure stood at 19.4 trillion yuan, up by 2.4 percent year-on-year, the official data indicated.
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