Economy China announces issue of special government bonds

Chinese Finance Minister Lan Fo'an has announced the issue of special government bonds. The country intends to use this to boost its ailing economy. The debt limit for local authorities will also be raised, the minister said.

Beijing will issue "special government bonds" "to help the large state-owned commercial banks replenish their core capital, improve their risk resistance and lending ability and better promote the development of the real economy", Lan Fo'an said at a press conference on Saturday, which had been eagerly awaited.

Beijing had already announced extensive economic measures last month, including interest rate cuts on existing real estate loans and relaxed rules for house purchases - China's real estate sector in particular is in crisis. The country is also experiencing high youth unemployment and weak domestic consumption.

China will provide the equivalent of almost 300 billion euros for special bonds in the next three months, Lan continued.

He also announced that the debt ceiling for local governments would be raised. "We will strengthen support for local governments in dealing with sovereign debt risks, raise debt limits to a greater extent and support local governments in dealing with hidden debts," said the minister.

The world's second-largest economy has been struggling with a sluggish recovery since the end of the coronavirus pandemic. Experts recently saw the government's growth target of around five percent for this year in jeopardy. In response, Beijing announced a comprehensive economic stimulus package.

SDA