Source: GT Published: 2023-12-26

Chinese provinces are preparing to issue local government bonds in 2024, with East China's Jiangsu, North China's Hebei and Shanxi as well as South China's Hainan provinces reportedly planning to issue more than 220 billion yuan ($30.8 billion) of bonds in the first quarter.

Industry analysts said that the total amount of front-loaded local government bond quota is expected to exceed 2 trillion yuan, which will help stabilize investment and boost domestic demand so as to bolster the economy.

In the first quarter of 2024, Jiangsu Province plans to issue bonds worth more than 140 billion yuan. Hainan Province plans to issue bonds worth 19.69 billion yuan in the first quarter, with 6 billion planned for January alone, according to local government agencies' circulars posted on financial portal chinabond.com.cn.

On Monday, the Finance Bureau of Heilongjiang Province announced that the quota of new local government bonds in 2024 will be allocated soon, and the bureau will start assessments of related projects in advance.

'This week, more regional authorities will announce their plans for local government bond issues for the first quarter of 2024, which will bring the total amount of the front-loaded 2024 local government bond quota to more than 2 trillion yuan,' Ye Qing, former deputy head of the statistics bureau of Central China's Hubei Province, told the Global Times on Tuesday.

Money raised from these bonds is expected to be used for various purposes, including repaying local government debt and paying for infrastructure projects, which will help ease local governments' fiscal pressure while increasing investment to inject momentum into the economy, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Tuesday.

He said that a major part of the front-loaded quota will be special-purpose bonds, which are an important part of the country's proactive fiscal policy and play an important role in expanding effective investment and stabilizing the economy.

The central government announced in October the issuance of 1 trillion yuan in additional government bonds in the fourth quarter to support the rebuilding of disaster-hit areas and increase the country's disaster relief capability.

In addition, the total proceeds from more than 29 regional authorities' issuance of special refinancing bonds since October have exceeded 1.3 trillion yuan, Ye said.

Ye said that a total of more than 4 trillion yuan in fiscal support will be a strong driving force for many industries in 2024, including construction materials and infrastructure. More importantly, such massive government investment will encourage private investment and help elevate the confidence of the private sector.

The Central Economic Work Conference held in Beijing from December 11 to 12 pointed out that efforts will be made to reasonably expand the scope of local government special-purpose bonds for capital purposes.

Currently, projects in more than a dozen sectors including railroads, roads and new-energy facilities allow the use of local government special-purpose bonds for this purpose.

Analysts expect more sectors will be included in this category to fully drive up investment.

Xi said that China's economic growth in 2024 may be slightly lower than this year due to a relatively higher base, but the economy will show more characteristics of high-quality development, especially in industrial structural adjustments and the new economy.

Whether China's GDP growth can reach 5 percent in 2024 depends on three factors, He Weiwen, senior fellow of the Center for China and Globalization, said at the Global Times Annual Conference over the weekend.

'The economy will gradually return to a normal growth trend, if challenges such as a lack of effective demand, overcapacity in some industries, weak public expectations and hidden risks can be eased; China's supply-side structural reforms and technology innovation make progress, and the external environment stabilizes,' He said.