China to step up local bond issuance to support slowing economy
BEIJING, October 22 (Reuters) – China intends to step up the pace of local government special bond issuance to boost investment and economic growth, the finance ministry said on Friday, striving to meet the annual quota by at the end of November.
Policymakers are looking to support a faltering recovery, as economic growth in the third quarter was the slowest this year, in part due to power shortages and swings in the real estate sector.
Chinese local governments issued a net amount of 2.22 trillion yuan ($ 346.97 billion) of special bonds in the first nine months of 2021, representing 61% of the annual quota, said Li Dawei, a head of the Ministry of Finance, during a briefing.
âThe rate of issuance has accelerated considerably since August,â Li said.
“We will strive to complete the 2021 special bond quota by the end of November to continue promoting the positive role of special bonds in local economic and social development,” he said.
China this year set an annual quota of 3.6 trillion yuan for special bonds from local governments, which mainly finance infrastructure projects.
The figures suggest that local governments could issue a monthly average of 717 billion yuan of special bonds in October and November, a big increase from the first nine months.
About half of the funds raised through special bonds in January-September went to transportation, urban infrastructure and industrial parks, with the rest going to affordable housing, education and health care, Li said.
China’s tax revenue fell 2.1% in September from a year earlier due to slower economic growth and statistical base effects, said Liu Jinyun, a second official in the ministry.
“Tax revenue growth is expected to show a downward trend over the next few months,” Liu said, adding that the government remains on track to meet its expected revenue this year and that budgeted spending will be guaranteed, said Liu.
Tax revenue increased 16.3% in the first nine months from the previous year to reach 16.4 trillion yuan, while tax expenditures increased 2.3% from the year previous to reach 17.9 trillion yuan, Liu said.
($ 1 = 6.3982 yuan Chinese renminbi)
(Reporting by Kevin Yao; Editing by Simon Cameron-Moore)
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