(Yicai Global) April 1 -- China’s local governments issued CNY1.82 trillion (USD290 billion) of local bonds in the first quarter, more than twice the amount issued in the same period of last year, China Securities Journal reported today, citing data from Wind. 

Local government bonds are an important fiscal tool to stabilize economic growth. Among them, new special bonds issued for designated projects amounted to CNY1.3 trillion, accounting for about 36 percent of the annual quota, the report said.

Yesterday alone, a total of CNY54.6 billion (USD8.59 billion) of local bonds were issued, including CNY51.6 billion of new special bonds, accounting for about 12 percent of last month’s total.

The report cited Xia Lei, co-director of Sealand Securities Research Institute, as stating that nearly 70 percent of the new special bonds issued so far this year have gone to finance infrastructure, especially for industrial parks and transport.

According to the data disclosed by southern Guangdong province, 38.6 percent of the special bonds issued in the quarter were invested in municipal and industrial park infrastructure, 28.2 percent in transport infrastructure and 15.4 percent in social undertakings such as science, education, culture and health.

Recently, many local authorities have disclosed bond sale plans for the second quarter, including CNY228 billion of new special bonds. China Securities Journal cited analysts who believed that the scale of local bonds will remain large this quarter, and the pace of issuance may be further accelerated.

The large-scale issuance of special bonds will play an important role in the stabilization and recovery of the economy, the report noted.

Zhang Jun, chief economist of Morgan Stanley Securities, said that the recent geopolitical risks and the domestic Covid-19 situation have hit China’s economic growth. Thus, stronger macro policies are needed.

The amount of new special bonds sold in the second quarter is expected to be at least the same as that in the first quarter, lifting the first half to about CNY2.5 trillion, he Zhang said.

Future sales of new special bonds may be further accelerated to promote effective physical investment, according to Yuan Haixia, vice president of the Research Institute of China Chengxin International Credit Rating.

Editor: Peter Thomas