Beijing, China – China announced on Tuesday a 1 trillion yuan ($137 billion) sovereign bond issuance, state media said, in a move experts say is an attempt to shore up the economy after a sluggish post-Covid recovery.
The funds will be distributed to local governments to support national disaster prevention and recovery, state news agency Xinhua said.
The central government will issue the bonds in the fourth quarter of this year, it added.
“All additional treasury bonds will be allocated to local governments through transfer payments, to focus on supporting post-disaster recovery and reconstruction, to make up for shortcomings in disaster prevention, reduction and relief, and to improve our country’s ability to withstand natural disasters,” Xinhua said.
Zhang Zhiwei of Pinpoint Asset Management said the move was “highly unusual” and “came to the market as a surprise”.
“I take this policy as another step in the right direction –- China should make its fiscal policy more supportive, given the deflationary pressure in the economy,” he wrote in a note.
“Part of the funds raised will be utilized next year, hence this helps to boost growth outlook beyond Q4.”