China to Issue 20, 30, and 50-Year Government Bonds to Combat Economic Stagnation
In response to the ongoing economic slowdown, China’s Ministry of Finance has announced the issuance of special 20, 30, and 50-year State bonds for the first time. These bonds are aimed at alleviating the effects of the economic stagnation in the world‘s second-largest economy.
The first batches of 20, 30, and 50-year bonds are set to enter the market on May 24, May 17, and June 14, respectively. According to sources cited by Bloomberg, the total value of the bonds will be significant, with 20-year bonds worth 300,000 million yuan, 30-year bonds worth 600,000 million yuan, and 50-year bonds worth 100,000 million yuan.
During China’s annual legislative session in March, the government announced plans to issue “ultra-long-term” bonds to address the financing needs of important projects. These bonds will focus on supporting national strategic implementation and the development of security capabilities in key areas.
The funds raised through the issuance of these bonds will be specifically allocated to projects related to technological innovation, integrated urban-rural development, regional integration, food and energy security, and the high-quality development of the population.
Analysts have pointed out that this move signals the active fiscal policy of the Chinese government, which aims to stimulate expectations, increase total demand, and improve the supply structure to boost economic recovery.
In 2020, China issued special state bonds to combat the impact of the coronavirus pandemic on the economy. However, this time, the bonds have a much longer maximum term, reflecting the severity of the economic challenges faced by the country.
Experts attribute the economic stagnation in China to low national and international demand, risks of deflation, insufficient stimuli, a real estate crisis, and a lack of confidence within the private sector. The issuance of these long-term bonds is seen as a strategic move to navigate through these challenges and spur economic growth.
(With information from EFE)