China Plans Record $411 Billion Special Treasury Bond Issuance Next Year

• Chinese authorities have agreed to issue 3 Trillion yuan (¥3Tn or US$411Bn) worth of special treasury bonds next year, two sources said. The issue would be the highest on record, as Beijing ramps up fiscal stimulus to revive a faltering economy.
• The plan for 2025 sovereign debt issuance would be a sharp increase from this year's ¥1Tn and comes as Beijing moves to soften the blow from an expected increase in U.S. tariffs on Chinese imports when Donald Trump takes office in January.
• The proceeds will be primarily targeted at boosting consumption via subsidy programmes, business equipment upgrades and funding investments in innovation-driven advanced sectors.
• The issuance "exceeded market expectations," said Tommy Xie, head of Asia Macro research at OCBC Bank. China does not generally include ultra-long special bonds in annual budget plans, as it sees the instruments as an extraordinary measure to raise proceeds for specific projects or policy goals as needed.
• As part of next year's plan, China plans to raise ¥1.3Tn through special treasury bonds to fund two "major projects" and two "new schemes". The major projects will focus on national infrastructure and security, while the new schemes offer subsidies for consumer trade-ins and business equipment upgrades.
• According to China’s state planner NDRC, the government had fully allocated the proceeds from this year's ¥1Tn, with about 70% of proceeds financing the "two major" projects and the remainder going towards the "two new" schemes.

(Source: Reuters)