(Yicai) March 5 -- China’s fiscal expenditure will be much higher this year than last as the central government increases its budget deficit and sovereign bond sales, economists said following the release of its annual work report.

The budget deficit, special bonds, and ultra-long-term special government bonds that China plans for this year total CNY8.96 trillion (USD1.24 trillion), up about CNY280 billion (USD38.9 billion) from last year, said Luo Zhiheng, chief economist at Yuekai Securities.

The CNY1 trillion (USD139 billion) of special government bonds issued in the three months ended Dec. 31 will be mainly used this year, so fiscal spending will be higher, Luo added.

National general public budget expenditure will likely be CNY28.5 trillion, up CNY1.1 trillion on last year, according to the Government Work Report delivered by Premier Li Qiang at the National People's Congress in Beijing today.

The government has set this year’s targeted fiscal deficit-to-gross domestic product ratio at 3 percent, resulting in a deficit of CNY4.06 trillion, an increase of CNY180 billion. It has also set a special bond issuance quota of CNY3.9 trillion, a CNY100 billion rise.

Investment is needed to build major projects, new-type urbanization, and projects to improve people's livelihoods, said Lv Bingyang, a finance professor at Renmin University of China. Against this backdrop, fiscal policy will not only increase general public budget expenditure to meet basic livelihood needs, but also expand special bond issuance to give full play to the driving force of government investment, he noted.

China will issue ultra-long-term special government bonds for several years starting in 2024 to fund major construction projects, implement major national strategies, and build security capabilities in key areas, according to the work report. CNY1 trillion of such debt will be issued this year.

China issued CNY1 trillion of special government bonds in the final three months of 2023 to help disaster-hit areas with reconstruction and improve their prevention and relief capabilities. The funds raised by this national bond issuance will be wholly allocated to local governments through transfer payments, with the central finance authority bearing the responsibility for repayment.

Editors: Dou Shicong, Martin Kadiev