China to sell US$230 billion of local debt as fiscal income slumps amid coronavirus, property pressures

Local authorities are believed to have room to issue an extra 1.55 trillion yuan (US$229 billion) in special debt and bonds this year to support infrastructure investment

Government finances have been squeezed this year as coronavirus lockdowns and an ongoing slump in the property market curbed economic growth and tax income

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Local governments have room to issue an extra 1.55 trillion yuan (US$229 billion) in special debt and bonds this year to support infrastructure investment, based on unused quota from previous years, several Chinese state newspapers reported on Thursday, citing analysts. Photo: Xinhua

Published: 2:00pm, 18 Aug 2022Updated: 2:17pm, 18 Aug 2022

China’s local governments are likely to sell more bonds in coming months, providing them with more resources to fund infrastructure projects as their finances come under strain.

Local governments have room to issue an extra 1.55 trillion yuan (US$229 billion) in special debt and bonds this year to support infrastructure investment, based on unused quota from previous years, several Chinese state newspapers reported on Thursday, citing analysts.

Government finances have been squeezed this year as coronavirus lockdowns and an ongoing slump in the property market curbed economic growth and tax income.

Revenue has also been impacted by tax cuts given to businesses to help shore them up during the downturn.

Zhang Yiqun, a member of the Society of Public Finance of China, said the third quarter will be an important window for sales of additional local government special bonds, according to the Shanghai Securities News.