(Yicai) April 2 -- Local governments in China issued a record CNY2.84 trillion (USD390.7 billion) of bonds in the first three months of this year, reflecting proactive fiscal policies aimed at stabilizing economic growth amid fiscal revenue challenges and hidden debt concerns.

The value of the bonds sold by local authorities soared 80 percent in the three months ended March 31 from a year earlier, according to ChinaBond, the bond information website run by China Central Depository & Clearing. New bonds accounted for around CNY1.24 trillion, up 48 percent from a year ago, while refinancing bonds made up about CNY1.6 trillion, a 119 percent leap.

The surge was mainly due to a big increase in special refinancing bonds used to swap out the hidden debts of local governments, Feng Lin, executive director of Golden Credit Rating International's research and development department, told Yicai. There was also a notable increase in the issuance of new special-purpose bonds, Fend added.

With China's economic growth under pressure and sluggish fiscal revenue growth in the first two months of the year, local governments have turned to bond sales to fund major infrastructure projects, providing a boost to investment and economic stability, Wen Laicheng, a professor at Central University of Finance and Economics, said to Yicai.

China’s general public budget revenue, the sum total of tax and non-tax revenues, dropped 1.6 percent in January and February from a year earlier, while government fund budget revenue fell 10.7 percent, according to finance ministry data.

The ministry expects the central government’s fiscal income to fall this year, while spending continues to increase amid a “more proactive” fiscal policy aimed at spurring economic growth. General public budget revenue may drop 3.5 percent to CNY9.7 trillion (USD1.33 trillion) in 2025, compared with 1.3 percent growth last year, while general public budget expenditure may jump 4.5 percent to CNY14.75 trillion (USD2.03 trillion), versus a 3.5 percent increase in 2024.

The funds raised from the sale of special-purpose bonds will continue to be targeted at infrastructure projects this year, according to Sun Jingyuan, head of China Bond Ratings' enterprise and institutional department. Newly added sectors, such as infrastructure for emerging industries, are also getting more funding, supporting technological and industrial innovation, he added.

The accelerated pace of local bond issuance reflects China’s fast implementation of proactive fiscal policies, Feng said, adding that this not only provides funding for major local project construction but also injects momentum into local economic growth.

The large-scale issuance last quarter drove investment in infrastructure construction, promoted stable economic growth, and reduced the debt repayment pressure on local authorities, Hu Hengsong, secretary-general of the China City Investment 50 Forum, told Yicai. The amount will likely expand further this year, with over 60 percent coming in the first half, Hu predicted.

Editors: Tang Shihua, Martin Kadiev