BEIJING: China said on Saturday it would issue special bonds to help its sputtering economy, signalling a spending spree to bolster banks, shore up the property market and ease local government debt as part of one of its biggest support packages in years.

The plan is part of a series of actions undertaken by Beijing to draw a line under a years-long property sector crisis and chronically low consumption that has plagued the world’s second-biggest economy.

Beijing’s planned special bonds are aimed at boosting the capital available to banks — part of a push to get them lending in the hopes of firing up sluggish consumer spending.

China is also preparing to allow local governments to borrow more to fund the acquisition of unused land for development, aimed at pulling the property market out of a prolonged slump.

No figures were provided on the planned special bonds announced at a highly anticipated press conference by Finance Minister Lan Fo’an and other officials, following a series of steps launched in recent weeks that have included interest rate cuts and liquidity for banks.

But Lan said China still has room “to issue debts and increase the deficit” to fund the new measures.

Officials have been battling to reverse China’s slowdown and achieve a growth target of five per cent this year — enviable for many Western countries but a far cry from the double-digit expansion that for years boosted the Asian giant.

On Saturday, Lan said Beijing was “accelerating the use of additional treasury bonds, and ultra-long-term special treasury bonds are also being issued for use”.

“In the next three months, a total of 2.3 trillion yuan of special bond funds can be arranged for use in various places,” he added.

On top of that, Beijing also plans to “issue special government bonds to support large state-owned commercial banks,” Lan said, although he did not say how much.

Chinese authorities have been urging commercial banks to lend more and lower mortgage rates — measures that would put more cash into the pockets of consumers.

Published in Dawn, October 13th, 2024