China's early issuance of special local government bonds will boost infrastructure
On February 1, an employee works at a construction site in Gui'an New Area of Guiyang, Guizhou province. The early and quick issuance of a special local government bond quota will boost infrastructure construction and support economic recovery, especially in the first quarter, according to analysts.
In January, the issuance and allocation of China's special local government bonds has been moving ahead of schedule, facilitating infrastructure projects at local levels and generating real economic activity.
Such an early and rapid issuance of special local bonds with funds being released from these bonds has notably mobilized the construction of a number of infrastructure projects across the country in January despite a weeklong holiday. Several infrastructure projects have recently started, according to a report by Chinese finance media resource Securities Times on Monday.
The government of Shaanxi province announced on January 28 the beginning of 795 key projects for the first quarter of this year, with a total investment of 564.6 billion yuan. The government of Guizhou province announced on February 1 the start of 687 major projects for the first quarter, with a total investment of 376.77 billion yuan.
According to Gao Ruidong, chief macroeconomist at Everbright Securities, he estimates that the weighted average of fixed asset investment targets at regional levels comes in at 8.3 percent, up by 0.2 percentage point compared to last year.
He said that investment in infrastructure construction and the manufacturing sector will continue to strongly underpin this year's growth.
He believes that this year infrastructure investment will grow at a faster pace than in previous years, and is echoed by Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.
The allocation of funds from the special local government bond quota has arrived ahead of schedule this year, Wang said that since late last year the central government has urged for steps to ensure the effective implementation of the policy package for stabilizing the economy. The government has also ordered that key projects and equipment upgrade and renovations supported by fiscal and financial policies be more advanced to generate real economic activities.
Wang said infrastructure investment will continue to be robust for the first quarter and is likely to sustain two-digit growth.
On January 30, when the Ministry of Finance released its spending and fiscal revenue figures for the last year, it said that special local government bonds are a key fulcrum in maintaining the intensity of fiscal spending and catalyzing effective investment.
This year, the government will set a reasonable amount of special local government bonds to boost investment, and these efforts will be made to make sure that the special bonds will play a contributing and effective role in driving regional economic growth.