China will make the most of government bonds to expand effective investment, enhance development momentum and promote steady economic growth, according to a decision made at the State Council's executive meeting chaired by Premier Li Keqiang on Mar.29.

The meeting noted growing complexities in the international landscape, new challenges facing domestic development, and increasing downward pressure on the economy. When formulating this year's macro policies, various changes in and outside of China have already been taken into account, it said.

Keeping the economy stable in the first quarter and first half of the year is crucial to achieving the annual target. It is imperative to swiftly implement the decisions and plans of the Communist Party of China Central Committee and the policy steps laid out in the Government Work Report, the meeting said.

The task of ensuring stable growth needs to take priority. Policies to keep the economy stable should be introduced whenever possible, while policies that could adversely affect market expectations should be avoided. Contingency plans to cope with greater uncertainty will also be drafted, the meeting said.

"Tax refund policies should be fully delivered as planned, and businesses will be supported to tide them over difficulties, and to stabilize and increase jobs," Li said.

The meeting noted that to keep the macro leverage ratio generally stable, 3.65 trillion yuan ($575 billion) of special bonds for local governments will be allocated this year. The Ministry of Finance had already funneled 1.46 trillion yuan from the 2022 quota by the end of last year.

Efforts will be made to deliver the remainder of the quota at a faster pace, prioritizing regions with a strong ability to pay service debt and with sufficient candidate projects.

"The advance quota allocated last year will be issued by the end of May, and the quota set for this year will be issued by the end of September," Li said.

"We must ensure that investment funds stay with projects they are allocated to. The launch and construction of projects will be expedited to generate more economic activity as quickly as possible."

Reform-oriented measures and market-based approaches will be applied to leverage the role of special-purpose bonds to attract more private sector investment.

Treasury and local government bonds will be issued in a coordinated way to maintain an appropriate level of treasury funds and ensure the fiscal resources needed for primary-level governments to provide tax refunds, tax and fee cuts and improve people's livelihood.

"Fund management should be strengthened to forestall debt risks and prevent the idleness of funds. The construction of new government buildings in violation of regulations must be strictly prohibited and no vanity projects will be tolerated," Li said.