(Yicai) April 24 -- China today issued the first tranche of its special treasury bonds for the year, some CNY286 billion (USD39.2 billion). That is seven times larger and more than three weeks earlier than it was last year, reflecting a more proactive fiscal policy aimed at steadying economic growth, analysts said.

The first tranche constitutes 16 percent of the annual quota for special treasury bonds, according to the finance ministry. It includes CNY165 billion of five-year bills, which will go to replenish bank capital, representing 33 percent of that allocated to state-owned lenders this year, as well as CNY50 billion of 20-year bonds and CNY71 billion of 30-year bonds, accounting for 9 percent of this year’s quota for ultra-long special treasury bonds.

China reintroduced special treasury bonds, an off-budget borrowing tool, in 2023 to help mitigate mounting downward pressure on the economy. That year and in 2024, the country issued CNY1 trillion (USD137 billion) of the bonds. This year, the quota has been raised to CNY1.8 trillion, according to the government’s work report.

CNY1.3 trillion of that will be allocated to ultra-long special treasury bonds to support key national strategies, strengthen security capabilities in critical areas, and enable large-scale equipment upgrades and the replacement of outdated consumer goods. The rest will be used to bolster the capital of major state-owned commercial banks.

Amid rising trade tensions between China and the United States, many experts suggest that fiscal policy may be further strengthened, including expanding special treasury bond issuance, to help offset economic headwinds. 

On March 30, the finance ministry announced that it would invest CNY500 billion to buy additional shares of the Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China. Of this, CNY165 billion has been earmarked for the Bank of China, the same as the amount issued today in five-year bonds.

Editors: Dou Shicong, Emmi Laine