China is set to begin selling its first batch of 1 trillion yuan ultra-long bond issuance from May to November. This is around $138.37 billion. The sale will include special 30-year treasury, with bonds in 20- and 50-year tenors starting on May 24 and June 14, respectively. Their aim is to raise more funds to support the economy.
Chinese Premier Li Qiang announced the bond sale plan in a March report, suggesting that Beijing might continue to conduct sales for several years to raise funds for mega projects and strategic sectors. He also announced a 2024 economic growth target of around 5%, which some economists consider ambitious.
The announcement came after a broad measure of China’s credit unexpectedly fell for the first time since 2005. While the issuance of special treasury bonds was widely anticipated, it arrived slightly earlier than expected. Becky Liu, Head of China Macro Strategy at Standard Chartered, believes there is a growing possibility of additional monetary policy easing in the near term, regardless of any rate cuts by the U.S. Federal Reserve.
The central debt offering will accelerate fiscal expenditure. This should ensure China hits its growth target of roughly 5% for this year.
