“The China’s Ministry of Finance is studying the possibility of allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of this year.an unprecedented acceleration of infrastructure financing aimed at propping up the country’s troubled economy,” Bloomberg said on Thursday.
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The bond sale would be brought forward to next year’s installment, according to people familiar with the discussions, who asked not to be identified because they are not authorized to speak publicly.
It would be the first time the emission is accelerated in this waywhich underlines Beijing’s growing concern about the serious situation of the world’s second largest economy.
The proposal to adjust that deadline will have to be reviewed by the State Council and may also need the approval of the country’s legislative body, the National People’s Congress.
Each year, local governments receive a quota for the number of general and special bonds they can sell. Until 2018, provinces and cities waited for the CNP meeting in March to officially approve that fee before they began selling the bonds, meaning the money would not be spent until much later in the year.
By the end of June, most of those bonds had been sold, meaning there is room in the second half of the year to sell more debt if the government wants to do so.
The Government’s growth target for 2022 looks increasingly difficult amid the Covid recovery and housing downturn. Economists surveyed by Bloomberg expect the economy to grow 4.1% this year.
Source: Fx Street
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