China to issue more than 1.5 trillion yuan in June

BEIJING - China is on track to issue more than 1.5 trillion yuan $224 billion in local government bonds during June, a monthly record underwriting infrastructure investments designed to stimulate the economy.

Local governments in the country have issued 1.41 trillion yuan in bonds this month, up nearly 80% from June 2021, according to Chinese media report. This figure is close to the record of 1.3 trillion yuan in May 2020, when China was focused on stabilizing its economy after the initial coronaviruses shock.

The June bond total will exceed 1.5 trillion yuan when scheduled issuances are included through Thursday.

More than 2.54 trillion yuan were issued in special bonds for the year through June 16, which is triple the total from the same period last year, according to the Finance Ministry.

The Chinese economy has deteriorated under the central government's strict zero-COVID policy. As domestic demand from the private sector shrinks, national leadership sees local infrastructure bonds as a leading role in revitalizing the economy.

China plans to issue up to 3.65 trillion yuan in infrastructure bonds this year. The Finance Ministry has told local governments to exhaust all the quota by the end of June. These governments were told by August to spend all the funds raised from infrastructure bonds.

The expansion of infrastructure investments is expected to raise China's economic growth rate in the second half of the year. Beijing is projected to have difficulty reaching its full-year growth target of 5.5%.

Yoshino Tamai, of the Itochu Research Institute, said that even if a full-fledged recovery results, the full-year growth rate will stop short at 4.3%.

In order to reach the 5.5% goal, Tamai said China might resume issuing special-purpose bonds created in 2020 for the coronaviruses response.