(Yicai) Dec. 12 -- China’s local governments have nearly completed this year’s issuance of newly approved bonds, with cumulative issuance reaching CNY5.3 trillion (USD750.9 billion) as of yesterday, according to public data.

The total quota for newly issued local government bonds this year is CNY5.4 trillion, with about 98 percent already issued, according to data from the Enterprise Early Warning platform. The issuance pace reflects strong demand for funding to support investment, as newly issued local government bonds have become a key source of financing amid persistent pressure on local fiscal revenue and spending.

The five provinces with the largest economic output accounted for around CNY1.8 trillion of the total, or about 34 percent. Guangdong province, excluding Shenzhen, issued about CNY496.6 billion (USD70.4 billion) of new bonds this year, followed by Shandong province, excluding Qingdao, with about CNY366.7 billion, Zhejiang province, excluding Ningbo, with CNY342.9 billion, Jiangsu province with CNY310.1 billion, and Sichuan province with about CNY281.8 billion.

Economically powerful provinces tend to secure larger new bond quotas due to their stronger fiscal capacity, larger number of major projects, and relatively lower debt risks. In addition, the approval process for special bond projects in these provinces has been more streamlined this year. China’s State Council has rolled out a pilot program in 10 provinces to decentralize approval authority for special bond projects, allowing them to be approved at the provincial level without further review by the National Development and Reform Commission or China’s finance ministry.

While the scale of local government bond issuance has expanded sharply in recent years, pushing up outstanding debt, issuance has remained within approved limits, and overall debt risks are considered manageable. Data from China’s finance ministry show that as of the end of October, outstanding local government debt stood at about CNY54.01 trillion (USD7.65 trillion), below the ceiling of around CNY57.99 trillion approved by the National People’s Congress.

Finance ministry data also show that as of the end of October, investors in the interbank bond market held about CNY51 trillion of local government bonds. Commercial banks accounted for roughly CNY37 trillion, or 69 percent, although their share has declined compared with previous years as the investor base has become more diversified.

Editor: Tang Shihua, Emmi Laine