By Kevin Yao and Liangping Gao
BEIJING- China will sharply increase funding from ultra-long treasury bonds in 2025 to spur business investment and consumer-boosting initiatives, a state planner official said on Friday, as Beijing cranks up fiscal stimulus to revitalize the faltering economy.
Special treasury bonds will be used to fund large-scale equipment upgrades and consumer goods trade-ins, said Yuan Da, deputy secretary-general of National Development and Reform Commission (NDRC) at a press conference.
“The size of ultra-long special government bond funds will be sharply increased this year to intensify and expand the implementation of the two new initiatives,” Yuan said.
Under the program launched last year, consumers can trade-in old cars or appliances and buy new ones at a discount, and a separate one that subsidizes large-scale equipment upgrades for businesses.
Households also will be eligible for subsidies to buy three types of digital products this year, including cell phones, tablets, smart watches and bracelets, Yuan said.
In December, the NDRC said Beijing had fully allocated all proceeds from 1 trillion yuan ($136.68 billion) in ultra-long special treasury bonds in 2024, with about 70 percent of proceeds financing “two major projects” and the remainder going towards the new initiatives.
Chinese leaders have pledged to “vigorously” boost consumption this year, raising expectations of more policy steps to spur demand and fight deflationary risks.
Millions of government workers across China were given surprise wage increases this week, people affected by the move said, as Beijing looks to boost spending.
China will also increase funding from special treasury bonds and expand the scope for another program that focuses on supporting key strategic sectors, Zhao Chenxin, vice head of the state planner told the press conference.
The government has approved projects for 2025 worth 100 billion yuan under this scheme in advance, he said.
The major programs refer to projects such as construction of railways and airports, development of farmland, and building security capacity in key areas, according to official documents.
The world’s second-biggest economy has struggled over the past few years due to a severe property crisis, high local government debt and weak consumer demand. Exports, one of the few bright spots, could face more US tariffs under a second Donald Trump administration.
Reuters reported last month that authorities have agreed to issue 3 trillion yuan worth of special treasury bonds in 2025, which would be the highest on record.
China is likely to allow local governments to increase issuance of special bonds to 4.7 trillion yuan this year, up from 3.9 trillion yuan in 2024, said Zhang Ming, a senior economist at the Chinese Academy of Social Sciences, a top state think tank. — Reuters
