China to Sharply Increase Treasury Bond Funding to Spur Growth in 2025
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China plans to significantly increase funding from ultra-long treasury bonds in 2025 to stimulate business investment and consumer spending, Nikkei Asia reports. This move aims to revitalize the faltering economy.
Yuan Da, deputy secretary-general of the National Development and Reform Commission (NDRC), announced the plan at a press conference. Special treasury bonds will be used to finance "two new" initiatives.
"The size of ultra-long special government bond funds will be sharply increased this year to intensify and expand the implementation of the two new initiatives," Yuan stated.
The "two new" initiatives include a subsidy program for durable goods, offering discounts to consumers who trade in old cars or appliances for new ones. The second initiative subsidizes large-scale equipment upgrades for businesses.
Households will also be eligible for subsidies to purchase three types of digital products this year: cell phones, tablet computers, smart watches, and bracelets.
In December, the NDRC reported that Beijing had fully allocated the proceeds from 1 trillion yuan in ultra-long special treasury bonds issued in 2024. Approximately 70% of these funds financed "two major" projects, while the remainder went towards the new initiatives.
Zhao Chenxin, vice head of the NDRC, also announced that China will increase funding from special treasury bonds and expand the scope of the major initiatives. The government has already pre-approved projects worth 100 billion yuan for these initiatives in 2025.
The major programs encompass projects such as railway and airport construction, farmland development, and bolstering security capacity in key areas.
China's economy has faced challenges in recent years due to a severe property crisis, high local government debt, and weak consumer demand. Exports, previously a bright spot, could face increased US tariffs under a potential second Trump administration.
Reuters reported last month that authorities have agreed to issue 3 trillion yuan worth of special treasury bonds in 2025, the highest on record.
Commenting on the 2025 economic growth target, Yuan emphasized China's commitment to balancing its immediate needs with medium- and long-term plans.
Reuters also reported that Chinese leaders have agreed to raise the budget deficit to 4% of GDP in 2025, the highest on record, while maintaining an economic growth target of around 5%.
"We are fully confident of driving continued economic recovery this year," Yuan stated, adding that China possesses ample policy space to support growth.
The Financial Times reported that the central bank is likely to cut interest rates from the current level of 1.5% "at an appropriate time" in 2025 as part of broader policy efforts to stimulate the economy.