Dec 27, 2019 07:27 PM

Chart of the Day: Local Governments to Start Early on 2020 Bond Sales

Seven Chinese local governments have announced plans to issue bonds to raise funds for infrastructure projects earlier than usual, following Beijing’s call to stimulate the slowing economy.

As of Thursday, local governments in Henan, Sichuan, Zhejiang, Hunan and Shanxi provinces and the cities of Shenzhen and Qingdao have said they will use some of next year’s special-purpose bond quotas in early January, earlier than usual, according to Caixin calculations based on documents from government websites and China Central Depositary & Clearing Co. Ltd., one of the country’s major clearinghouses.

Both the Henan and Sichuan governments are planning to issue special-purpose bonds as early as Jan. 2, according to their official documents, while this year, local governments started to sell bonds on Jan. 22.

Special-purpose bonds are mostly designated to raise funds for investment in infrastructure such as roads, sewers and public services. Local governments usually use these to fund mid- to long-term infrastructure projects.

The issuance of such bonds is subject to rules set out by Beijing. Before this year, annual bond quotas were issued after approval by the National People’s Congress, China’s top legislature, at its annual session in March, but its standing committee passed a bill in December 2018 allowing the central government to assign annual quotas early, which enables local governments to start issuing new debt as early as January of each year.

The seven local governments’ early issuance plans come after China’s Ministry of Finance recently gave the green light for local governments to issue special-purpose bonds totaling 1 trillion yuan ($143 billion) early next year, in a bid to speed up bond sales to boost investment and increase domestic demand.

The seven local governments plan 184.4 billion yuan of special-purpose bonds in total in January, nearly one-fifth of the 1 trillion yuan early allocation quota.


China’s economic growth slowed more than expected during the course of 2019 and is forecasted to sink further next year. Several analysts estimated that the total special-purpose bond quota for 2020 will probably top 3 trillion yuan, an increase of at least 39.5% from this year’s 2.15 trillion yuan.

However, infrastructure investment growth remains sluggish in spite of government efforts to spur spending. Government-driven infrastructure investment rose 4% year-on-year in the first 11 months of the year, down slightly from 4.2% growth in the first 10 months and marking the second straight month of deceleration, according to data from the National Bureau of Statistics. The growth is way lower than the 19% growth recorded for the whole of 2017.

Guo Yingzhe contributed to this report.

Contact reporter Tang Ziyi (

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