China begins selling long-term bonds to stimulate economy

(MENAFN) In a bid to bolster its economy, China announced plans to commence the sale of a series of long-term bonds this week, as disclosed by the Finance Ministry on Monday. The Chinese government intends to kick off the issuance with 30-year bonds slated for sale on Friday, marking the initiation of a strategy to sell debt exceeding USD138 billion. Details provided on the ministry's website outlined subsequent sales, with 20-year bonds scheduled for issuance on May 24 and 50-year bonds set for release on June 14. However, specific figures regarding the quantity of bonds to be issued were not provided in the announcement.

China's economy is currently grappling with a myriad of challenges, including notable fluctuations in the real estate sector and elevated levels of youth unemployment. Against this backdrop, Beijing has set a target of approximately five percent economic growth for the year. Nonetheless, Chinese officials have acknowledged the formidable hurdles in achieving this goal, underscoring the need for proactive measures to stimulate economic activity.

The decision to sell bonds aligns with China's strategic objectives of supporting large-scale projects deemed crucial for the nation's development. Prime Minister Li Qiang affirmed this strategy in March, highlighting the allocation of bond proceeds towards initiatives of strategic significance. Notably, China's issuance of long-term bonds has been infrequent and typically reserved for periods of significant economic adversity, as evidenced by similar measures implemented at the onset of the COVID-19 pandemic in early 2020.

As China navigates through economic challenges and strives to maintain growth momentum, the sale of long-term bonds represents a concerted effort to mobilize resources and fund critical initiatives essential for driving sustainable development. The success of this initiative will hinge upon effective deployment of funds and prudent fiscal management, as China endeavors to navigate uncertainties and fortify its position as a key player in the global economy.



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