China eyes $284 billion of sovereign debt this year to boost economy

China plans to issue a staggering 2 trillion yuan ($284 billion) in special sovereign bonds this year as part of a fresh stimulus package aimed at reviving the economy, two sources with knowledge told Reuters on Thursday.

As part of the package, the Chinese Ministry of Finance (MOF) intends to issue 1 trillion yuan of special sovereign debt primarily to stimulate consumption amid growing concerns about a stuttering post-COVID economic recovery, the sources added.

Part of the MOF proceeds raised through special bonds, which are floated for a specific purpose, will go for increasing subsidies for the trade-in and renewal of consumer goods and for the upgrade of large-scale business equipment, noted the two sources.

The proceeds will also go for providing a monthly allowance of about 800 yuan, or $114, per child to all households with two or more children, excluding the first child, the first source said.

The country also seeks to raise another 1 trillion yuan via a separate special sovereign debt issuance in order to use the proceeds to help local governments tackle their debt problems, the source added.

These measures, along with previously announced monetary stimulus and property market support, reflect the Chinese government’s determination to address deflationary pressures and achieve its 2024 economic growth target.

While the government has been focusing on investment-driven stimulus, the recent measures demonstrate a shift toward supporting consumption and addressing social welfare needs.

Attribution: Reuters