As a key measure to strengthen the foundation, fill the short board, benefit the people's livelihood and expand investment, the issuance and investment fields of local government special bonds (hereinafter referred to as "special bonds") have always been an important window to observe the efforts of fiscal policy.
Recently, the General Office of the State Council issued the Opinions on Optimizing and Improving the Management Mechanism of Local Government Special Bonds (hereinafter referred to as the "Opinions"), proposing to "expand the scope of special bonds used as project capital"124.
"Special bonds are an efficient financing tool. Usually, the funds of special bonds mainly flow into the field of infrastructure construction, such as the construction of public service facilities such as transportation, energy and water conservancy, providing a lower cost and longer-term source of funds for relevant projects." Tian Huimin, a special researcher of the Beijing Reform and Development Research Association, told reporters that the issuance of special bonds provides necessary funds for public welfare projects with certain income, which helps to improve the level of public services and promote economic development.
Zhou Maohua, a macro researcher at the Financial Markets Department of China Everbright Bank, said in an interview with reporters that expanding the scope of special bonds used as project capital will better play its leverage role, pry and guide more social capital into major projects and important areas in various regions, promote industrial transformation and upgrading, and benefit scientific and technological innovation.
The Opinions further clarify that "in terms of the scope of special bonds used as project capital, a 'positive list' management shall be implemented, and the infrastructure of emerging industries such as information technology, new materials, bio-manufacturing, digital economy, low-altitude economy, quantum science and technology, life science, commercial spaceflight, Beidou, etc., the infrastructure of computing power equipment and auxiliary equipment, the safety and intelligent transformation of traditional infrastructure such as expressways and airports, as well as the infrastructure of health care, elderly care and childcare, provincial industrial park infrastructure, etc. shall be included in the scope of special bonds used as project capital"25.
Sheng Lei, deputy director of the Investment Research Institute of the China Macroeconomic Research Institute, told reporters that industries such as the low-altitude economy and commercial spaceflight are important engines for the development of new quality productive forces and the focus of many domestic policies. Including the infrastructure construction of the above industries in the scope of special bonds used as project capital in the form of a "positive list" can not only guide local relevant departments to launch more projects in the emerging industry field, but also improve the use efficiency and flexibility of special bonds and accelerate the release of the effectiveness of the proactive fiscal policy.
The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization" adopted at the Third Plenary Session of the 20th Central Committee of the Communist Party of China proposed to "reasonably expand the support scope of local government special bonds and appropriately expand the fields, scales and proportions used as capital". The Central Economic Work Conference held in December required to "increase the issuance and use of local government special bonds and expand the investment fields and the scope used as project capital".
Dong Qingma, deputy dean of the China Financial Research Institute of Southwestern University of Finance and Economics, told reporters that the formal introduction of the "positive list" is the continuation and implementation of a series of policies in 2024 and an important manifestation of promoting reform and implementing the proactive fiscal policy.
The Opinions also propose that "the proportion of special bonds used as project capital shall be increased. Taking the province as the unit, the upper limit of the scale of special bonds that can be used as project capital shall be increased from 25% to 30% of the scale of special bonds used for project construction in the province"124.
Dong Qingma analyzed that increasing the proportion of special bonds used as project capital can enhance the leading investment intensity of local governments in projects, relieve the financing pressure of projects, optimize the efficiency of resource allocation, ensure the progress of project construction as planned, and promote the formation of physical workloads of fiscal funds as soon as possible.
Data from the China Bond Information Network shows that as of December 26, at least nine regions including Guizhou, Hebei, Sichuan, Hainan, Shanxi, Chongqing, Yunnan, Gansu and Fujian have publicly disclosed the local government bond issuance plans for the first quarter of 2025.
In this regard, Tian Huimin said that the introduction of the Opinions will accelerate the issuance progress of special bonds in various regions next year, speed up the start-up and construction process of projects, and provide strong support for promoting the continuous recovery and improvement of the economy. (Outlook New Era)
Economy
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