China to accelerate issuance of gov’t bonds, says finance minister

BEIJING, China – China will accelerate the issuance and use of government bonds, state-run news agency Xinhua reported on Sunday citing an interview with new finance minister Lan Foan.

The finance ministry will steadily promote the resolution of local government debt risk and increase efforts to better leverage the role of special bonds to boost the economy, Xinhua cited Foan as saying.

“The Ministry of Finance will continue to implement a proactive fiscal policy, focus on improving efficiency, and better play the effectiveness of fiscal policy,” said Lan, who also noted the “complex domestic and international situation”.

Some new local government debt quotas for 2024 have been issued in advance to reasonably ensure local financing needs, he said.

Lan, a 61-year-old technocrat with little central government experience, was named finance minister in state media last month, at a time when the government is ramping up fiscal stimulus to revive the world’s second-biggest economy.

He succeeded Liu Kun who had held the position since 2018. Previously, Lan was party chief of the northern province of Shanxi.

His appointment comes as the central government draws on a well-used playbook that relies heavily on debt and state spending but that analysts said falls short on deeper reform.

The top parliamentary body last month approved the issuance of 1 trillion yuan ($137 billion) in sovereign bonds in the fourth quarter to fund rebuilding of areas affected by floods, state media reported.

The economy grew faster than analyst estimates in the third quarter, improving the chances the government can meet its full-year growth target of around 5 percent.

READ: China’s Q3 economic growth beats market forecast, headwinds persist

But headwinds persist as a property crisis deepens and private firms are reluctant to spend amid weak confidence.

The ruling Communist Party will step up leadership of China’s $61-trillion finance industry and strengthen efforts to reduce local debt risk, state media reported, citing a twice-a-decade financial policy meeting held Oct. 30-31.

($1 = 7.3005 Chinese yuan renminbi)