China may raise an extra $850 bln from treasury bonds to revive economy, says report

China may raise an additional 6 trillion yuan ($850 billion) from special treasury bonds over three years to help bolster a sagging economy through expanded fiscal stimulus, Caixin Global reported, citing multiple sources with knowledge of the matter.

The funds will be partly used to help local governments resolve their off-the-books debts, according to the sources, the report said late on Monday.

The reported amount is equivalent to nearly 5% of China's economic output.

Reuters reported last month that China had plans to issue special sovereign bonds worth about 2 trillion yuan ($285 billion) this year as part of fresh fiscal stimulus.

China's finance ministry this past weekend unveiled a fiscal stimulus package aimed at reviving the fragile economy and achieving the government's 2024 growth target of around 5%, though it did not disclose the size of the new measures.

The ministry pledged to "significantly" increase government debt issuance to provide subsidies to low-income households, support the property market and replenish state banks' capital as part of efforts to jumpstart economic growth.

The central bank in late September unveiled its most aggressive monetary stimulus package since the COVID-19 pandemic, coupled with extensive property market support including mortgage rate cuts.

Analysts believe increased fiscal spending, particularly on consumption, will be vital in boosting growth.

Analysts and investors expect the Standing Committee of the National People’s Congress, China’s top legislature, to approve extra budget funding at its meeting later this month.

At China's annual parliament meeting in March, Premier Li Qiang said that starting this year the government would issue ultra-long-term special treasury bonds for several consecutive years, to be used to fund major national strategic projects.

China will issue 1 trillion yuan in such bonds this year.

($1 = 7.0870 yuan)