Nov 16, 2018 05:36 PM

Chart of the Day: Bumper Bond Issuance Aims to Prop Up Flagging Growth

Local governments have heeded Beijing’s call to accelerate bond issuances to bolster a cooling economy. Through October, 4.05 trillion yuan ($580 billion) worth of local government bonds were issued, up 4.7% year-on-year, according to government data.


Graphic: Gao Baiyu/Caixin

The total amount of new local government bonds issued in October fell 65.8% from the previous month to 256 billion yuan, according to government data.

Analysts say the smaller amount of bonds issued in October show that local governments are close to fulfilling their outstanding bond quota for this year. Bond issuance peaked in August and September, according to government data, with more than 1.6 trillion yuan of bonds issued in those two months.

In March, the Ministry of Finance encouraged local governments to issue new special-purpose bonds this year. Through September, local governments issued 1.76 trillion yuan in special-purpose bonds. Local governments use the funds raised from these bonds to invest in infrastructure projects including toll roads, subways and the renovation of run-down urban residential neighborhoods known as shantytowns.

Special-purpose bonds were introduced in 2015 to support key investment projects while also bringing more transparency to local government debt. The bonds are meant to be repaid with income generated by the projects in which they are invested. That’s in contrast with “general bonds,” which are paid back using fiscal revenue.

Through October, government-driven infrastructure investment, which includes spending on the construction of roads, railways and some other public facilities, rose 3.7% year-on-year, according to data released Wednesday by the National Bureau of Statistics (NBS). The reading was higher than the first nine months’ increase of 3.3%, which was the slowest growth rate in available data going back to March 2014. The growth pickup in October marked its first rebound of this year.

Contact reporter Charlotte Yang (

You've accessed an article available only to subscribers
Share this article
Open WeChat and scan the QR code