Local Government Bonds Exceed One Trillion Yuan in Issuance This Year
A reporter from the Shanghai Securities News has uncovered data from the Special Bond Information Network revealing that local government bonds totaling over one trillion yuan have been issued this year as of March 27, with new bond issuance constituting nearly half of that amount.
Experts have noted that the issuance of new special bonds has significantly quickened since February, demonstrating the proactive nature of fiscal policy. It is anticipated that local government bond issuance will continue to grow moderately in the first three quarters of the year, providing essential support for infrastructure investment.
The disclosed local government bond issuance plan for the second quarter is set to exceed 800 billion yuan. As of March 27, a total of 1,486.9 billion yuan in local government bonds have been issued in 2021, with 762.8 billion yuan in new bond issuances.
Shandong and Guangdong are leading in local bond issuances, with both exceeding 100 billion yuan. The top three regions with new special bond issuances are Guangdong, Shandong, and Henan.
Experts like Wen Bin, chief economist of China Minsheng Bank, have remarked on the slight increase in new special bond quotas this year, focusing on improving the efficiency of bond fund utilization. The allocation of special bond quotas will favor areas with well-prepared projects and high investment efficiency.
While the pace of new special bond issuance has accelerated since February, it still lags significantly behind previous years. Huang Weiping, chief executive of Industrial Securities Fixed Income, believes that the delay in issuance progress is due to the impact of additional treasury bond issuances in the fourth quarter of last year.
Looking ahead, local governments have disclosed a plan to issue 815.1 billion yuan in local bonds in the second quarter, with the top three regions for new special bond plans being Zhejiang, Jiangxi, and Jiangsu.
The investment direction of the bond funds primarily focuses on infrastructure projects, with a notable increase in investment proportion in this sector compared to last year. The National Development and Reform Commission aims to optimize investment areas and expand the scope of capital use for local government special bonds.
The policy of promoting effective investment through a “combination punch” of funds totaling over 6 trillion yuan has been put into place. It includes a scheduling mechanism for additional government bond issuance projects and further coordination with various departments to enhance the efficiency of government investment.
The moderate pace of fiscal expenditure has also created room for economic growth expectations, with national general public budget expenditures increasing by 6.7% year-on-year in the first two months of the year. The progress of completing the full-year budget is at 15.3%, the fastest in the past five years.
Overall, the issuance of local government bonds and the strategic allocation of funds are expected to support economic recovery and infrastructure development in China.