(Yicai) Nov. 24 -- To support technological innovation and industrial upgrading, China has approved local governments to inject money raised through special bonds into government investment funds for the first time this year, with a total of CNY82.5 billion (USD11.6 billion) such bonds disclosed to be issued so far.

Chinese localities, including the municipal governments of Beijing, Guangzhou, Shanghai, and Shenzhen, have issued a total of CNY62.5 billion special bonds to replenish their investment funds so far this year. This month alone, they are expected to add CNY20 billion.

The Guangdong Provincial Department of Finance announced on Nov. 21 it will issue CNY10 billion worth of 30-year special bonds to raise funds for the Guangdong Provincial Government Investment Fund on Nov. 28. On the same day, the finance department of southwestern Sichuan province will sell CNY5 billion (USD703.5 million) special bonds with a 15-year term to pour money into Chengdu Venture Capital.

Moreover, the Shanghai Municipal Bureau of Finance also announced that it will issue CNY3 billion of 15-year special bonds and CNY2 billion of 20-year special bonds on Nov. 28, with the proceeds set to be invested in the Shanghai Future-oriented Industrial Fund and Pujiang Chuangyuan Fund.

Local governments issue special bonds to fund specific projects that can generate a stable income, which will pay off the debt. Before, China did not allow them to issue special bonds for equity investment funds, but in December last year, the State Council said it would broaden the investment scope of special bonds to support the development of emerging industries.

In January, the State Council released a document on promoting the high-quality development of government investment funds, emphasizing that they should give full play to the guiding role of the government, attract and drive more social capital to support the construction of a modern industrial system, and accelerate the cultivation and development of new quality productive forces.

Government investment funds are divided into two categories: industrial investment funds and venture capital. The former are tasked with supporting the transformation of traditional industries, the expansion of emerging industries, and the layout of future industries, and the latter are entrusted to promote scientific and technological innovation and solve bottleneck problems in key areas.

Editors: Dou Shicong, Futura Costaglione