Helena Lyng Blak
2 weeks ago

China to Issue $138 Billion in Ultra-Long Treasury Bonds

China will issue ultra-long treasury bonds to bolster economic growth and aid local governments.
poringdown@gmail.com / DepositPhotos
poringdown@gmail.com / DepositPhotos

On Friday, May 17, 2024, China will begin sales of its 1 trillion yuan (approximately $138 billion in US dollars) of ultra-long special treasury bonds, Bloomberg reports. 

The first batch to be issued will consist of 40 billion yuan of 30-year bonds. According to anonymous sources, 600 billion yuan of the total 1 trillion will be in this category.

An additional 300 billion yuan of 20-year bonds and 100 billion yuan of 50-year bonds will begin rollout over the next couple of weeks. The first batch of 20-year bonds will reportedly be issued on May 24, and the first batch of 50-year bonds on June 14. 

The bonds were announced by Premier Li Qiang in March at the National People’s Congress, China’s most prominent annual political meeting, alongside the government’s growth target of 5% for 2024.

“This is slightly below the realized 2023 level of 5.2%, but that number was achieved with 2022, the year of lockdowns, as the benchmark year,” said geopolitical analyst Mikkel Rosenvold at the time. 

“So, a 5% growth target can be sold as quite ambitious internally in China while still being quite realistic to actually achieve.”

Li further said that the issuance of the ultra-long treasury bonds might continue in the foreseeable future. 

According to the South China Morning Post, this raises expectations among local governments, suffering under rising debt pressures, that the central government may be increasing its fiscal spending. 

This marks the fourth time in 26 years that China has sold these types of bonds, with the most recent occurrence in 2020.

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