China to speed up infrastructure projects to shore up growth, amid call to ‘determine scale’ of debt

China is to accelerate new debt issuance to shore up growth amid calls from the national legislature for measures that could “scientifically determine the scale” of the country’s medium and long-term liability level.

The Ministry of Finance said it would supervise and accelerate the issuance of local government bonds, according to the 2022 budget report by finance minister Liu Kun to the top legislature.

As of the end of May, 2.25 trillion yuan (US$311 billion) of new bonds had been issued, Liu said, according to a copy of last week’s speech, which was published on Tuesday.

“[We will] give full play to the guiding role of government investment, appropriately expand the scope of investment in local government special-purpose bonds and the scope of project capital, make good preparations for projects, improve the quality of project reserves, and give priority to supporting mature projects and projects under construction,” Liu said.

He added that efforts would be made to prevent “blind” expansion of investments, as well as to attract more private capital.

Liu also pledged “strict” supervision of local government debt, while the ministry will “expose” authorities that violate debt rules in a bid to “warn” and “deter” such practices.

The statement comes amid growing concerns over the sustainability of local government debt, which has risen to a record high.

The National People’s Congress’ (NPC) Financial and Economic Affairs Committee responded to the budget report by calling for measures that could “scientifically determine the scale” of the country’s medium- and long-term liabilities.