(Yicai) May 7 -- China has sharply front-loaded local government bond issuance in the year through April, with sales reaching a record high for the period of CNY3.92 trillion (USD576.3 billion).

Local government bond issuance jumped 11 percent in the four months ended April 30, up from CNY3.54 trillion a year earlier, according to data compiled by Yicai.

The quick-fire sales pace reflects a push to get local government special bonds issued, used, and translated into economic results as early as possible after March’s National People's Congress set the annual quota at CNY4.4 trillion, the same as last year.

A more proactive fiscal policy has been deployed earlier this year to counter economic pressures and provide solid support for stable growth, Zhong Ninghua, a professor at Tongji University's School of Economics and Management, told Yicai. He added that the early bond issuance trend is likely to peak this quarter, he added.

The rapid pace has a big effect on stimulating investment, said Wen Laicheng, professor at Central University of Finance and Economics. In the first quarter, government-led infrastructure investment increased 8.9 percent from a year earlier, reversing last year's decline.

There are two types of local government bonds: new and refinancing. New special bonds are the main category of new bonds, with the funds raised mainly used for infrastructure, industrial, and public welfare projects. They are included in government fund budgets, so do not count towards fiscal deficits. Refinancing bonds are used to repay the principal of maturing bonds.

Of the CNY3.92 trillion issued from January to April, about CNY1.65 trillion or 42 percent were new bonds, and CNY2.27 trillion or 58 percent were refinancing bonds, up 10 percent and 11 percent, respectively, from the same period last year.

About CNY1.33 trillion of the new notes were new special bonds, up 12 percent. Twenty-eight percent were allocated to municipal and industrial park infrastructure, 19 percent to transportation infrastructure, 13 percent to affordable housing projects, 12 percent to land reserves, 10 percent to social services projects, such as healthcare and education, and 7 percent to agricultural, forestry, and water conservancy projects.

Based on the allocation of local bond funds in the four months, infrastructure building remains the primary investment target, Zhong noted, adding that the support for new infrastructure projects, such as local fifth-generation network base stations and computing power centers, is also increasing.

Special bond funds have been used to support the renovation of urban villages and the acquisition of existing commercial housing in recent years, Zhong said. This can help revitalize existing assets, provide resources for affordable rental housing, and promote the transformation of housing supply towards a dual-track system of “market + guarantee,” which is beneficial for stabilizing the real estate market, he said.

Moreover, special bond funds work in synergy with special treasury bonds and central budgetary investment funds, focusing on projects such as new urbanization, infrastructure for emerging industries, and the digital and smart transformation of traditional infrastructure, according to Zhong.

These efforts aim to support the development of a modern industrial system, stabilize the real estate market, and fund livelihood protection projects, he pointed out.

Editors: Tang Shihua, Futura Costaglione