Infrastructure projects
To boost the nation's flagging economy, a sizable package of government bonds will be issued in the fourth quarter. Additionally, over $110 billion in support will be given to infrastructure projects.
According to two sources, China's Finance Ministry intends to issue approximately 2.5 trillion yuan ($347.4 billion) in treasury bonds in the fourth quarter to support the faltering economy.
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| In an effort to boost the economy, a sizable package of Treasury bonds will be issued in the fourth quarter and billions will be spent on infrastructure projects. File shot from Reuters |
The Securities Times reported on Thursday that it also has plans for an infrastructure credit support package of $42 billion.
After the economy narrowly avoided contracting in the June quarter, policymakers are preparing to support it as it is hampered by severe Covid limits and a property crisis.
The idea to issue Treasury bonds was made during a meeting of the ministry on Wednesday, according to the sources.
According to them, the ministry has also asked local governments to meet quotas from prior years by issuing 500 billion yuan worth of special bonds by the end of October. An inquiry for comment was not immediately answered by the ministry.
The anticipated issuance is anticipated to increase by 21% from the government bond issuance of 2.06 trillion yuan in the same quarter a year ago.
Authorities are stepping up their infrastructure push and dusting off an old playbook by issuing debt to fund significant public works in an effort to boost the economy in the midst of a sluggish consumption rebound and slowing exports growth.
By the end of June, 3.45 trillion yuan in local government infrastructure special bonds had been issued.
Loans for infrastructure
According to the official Securities Times on Thursday, China also provided further financial support for infrastructure projects on Wednesday.
According to the state news site, the $42 billion in loans that make up the support package will be made available through three state banks.
The intervention is a further effort to boost the economy of the nation, which is projected to grow more slowly than neighbouring Asian economies for the first time since 1990.
China's government announced yet another round of economic stimulus measures on August 24. One of the changes involves increasing the cap on tools for funding policy by $42 billion.
The newspaper stated that additional funds from around $69.5 billion in special bonds sold by local government under carry-over quotas from 2019 will be used for infrastructure projects in the fourth quarter to guarantee growth in infrastructure investment of around 10% for the entire year.
Premier Li Keqiang was cited by official media as stating on Wednesday that China's economy had largely recovered and stabilised in the third quarter and that the nation will continue with its economic agenda in the fourth.
However, with little indications that China will soon considerably relax its zero-Covid policy, many analysts predict that this year's economic growth will be the weakest since 1976, discounting the 2.2% expansion that occurred when the Covid epidemic initially struck in early 2020.
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