(Yicai) Dec. 27 -- China's central government has delegated the authority to review and approve the issuance of local government special bonds to 10 provincial-level regions, including Beijing, Shanghai and one national-level new area, in a move that is expected to greatly speed up the pace of special bond issuance next year.

The municipalities of Beijing, Shanghai, as well as Guangdong, Jiangsu, Shandong, Sichuan, Zhejiang, Fujian, Hunan, and Anhui provinces and the Xiong'an New Area in Hebei province will be the first pilot areas for the independent review of special bonds, the State Council said on Dec. 25. They will no longer need to report to the National Development and Reform Commission and the Ministry of Finance for approval.

Local government special bonds are used to raise construction funds for specific projects, and they are generally repaid by income generated by the projects themselves. Generally, before special bonds could be issued, they would go through a laborious procedure where they were checked by the economic and financial departments of both the provincial and national governments to ensure the feasibility and the income prospects of the projects.

China has jacked up the issuance of special bonds in recent years as part of its proactive fiscal policy to promote economic recovery after the Covid-19 pandemic. This year, the quota for new special bonds hit an all-time high at CNY3.9 trillion (USD534.4 billion). And next year this figure might reach CNY4.5 trillion (USD616.5 billion), according to industry insiders.

These 10 provinces and cities accounted for 58 percent of the country's new special bond issuance this year, and they released the bonds significantly faster than other provincial-level regions, Liu Yu, chief economist of Huaxi Securities, told Yicai. By giving them the right to approve bond issuance, it will allow them to independently arrange the use of funds as well as improve efficiency and boost the pace of issuance, he added.

Unlike this year, when most special bonds were released in the second half, issuance might start earlier next year to get new projects underway as soon as possible and to give the infrastructure industry a boost, Liu said.

Earlier this month, China’s annual central economic work conference proposed that a more proactive fiscal policy be implemented next year, which would include raising the fiscal deficit ratio and increasing the issuance of ultra-long-term special treasury bonds and local government special bonds.

Editors: Dou Shicong, Kim Taylor