Oct 11, 2018 03:53 PM

Chart of the Day: Local Government Bond Sales Spike in Third Quarter

Local government issued bonds in the third quarter worth 2.39 trillion yuan ($345 billion), up 43% year-on-year and the second-highest amount in a single quarter since 2015, after Beijing called for more infrastructure investment to bolster flagging economic growth.


A total of 748.5 billion yuan worth of local government bonds were issued in September, up 110% year-on-year, according to Caixin calculations based on government data.


Beijing has been calling on local governments to speed up the issuance of special-purpose bonds to fund infrastructure investment in a bid to boost the country’s slowing economic growth. Special-purpose bonds are often used to finance infrastructure projects and can be repaid only by income from those projects.

In its August guidance (link in Chinese), the Ministry of Finance advised local governments to use up no less than 80% of their respective special bond issuance quotas by the end of September. The rest should be issued during October, it added.

The top banking regulator has also introduced new measures to incentivize banks to increase their holdings of local government bonds. Banks, under the new measure, are able to buy as many of the bonds they’ve underwritten as they want.

But despite regulators’ efforts to boost fiscal spending, China has seen weak momentum in infrastructure investment this year. Year-on-year growth in infrastructure investment, which consists of spending on roads, railways and other public facilities, slowed to 4.2% for the first eight months of 2018 from 5.7% in the first seven months, according to the National Bureau of Statistics.

Contact reporter Charlotte Yang (

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