(Yicai) Aug. 8 -- Jiangxi province in eastern China, which has a higher special debt to gross domestic product ratio than neighboring provinces at 21 percent, used most of the funds raised to finance new projects, according to the latest research.

The proportion of Jiangxi province’s newly added special debt that was used in social undertakings, transportation infrastructure, affordable housing projects and energy was relatively high, according to a study by a research team at Shanghai’s Tongji University. And the yield over the years 2017 to 2022 was above the national average.

And the proportion that is being used to repay the principal of maturing special bonds, known as refinancing special bonds, is dwindling, said Zhong Ninghua, leader of the research team. The refinancing of special bonds dropped to 6 percent of all Jiangxi province’s special bonds that year from 11 percent the previous year. Whereas nationwide, refinancing special bonds jumped to 21 percent from 13 percent.

Since the beginning of the year, the credit spread, which reflects investors’ assessment of the risk associated with special bonds, in Jiangxi province’s bond market has been generally low and stable, according to the report “Research on the Objectives, Difficulties and Realization Path of Local Government Debt Risk Management and Control under the New Situation” which was funded by the National Social Science Fund.

Only a small part of Jiangxi province’s special debt was used in environmental protection but the proportion used in municipal and industrial parks, agriculture, forestry and water conservancy was basically the same as the national average, the report said. But the returns on these two segments was lower than the national average from 2017 to 2022.

Jiangxi province had issued CNY681.6 billion (USD94.5 billion) of special debt as of the end of last year, ranking 14th in the country. Its total debt balance was CNY1 trillion (USSD150.5 billion), placing 15th nationwide. And the ratio of the province’s debt to GDP was 34 percent.

Local government debt risks are generally controllable at present but the pressure is rising. On July 24, the Political Bureau of the CPC Central Committee put more emphasis on the prevention and resolving of local debt risks as well as the formulation and implementation of debt solutions.

Editor: Kim Taylor