China Launches Sale of Government Bonds
China is planning to release long-term government bonds to bolster its struggling economy. The Ministry of Finance declared that close to 138 billion dollars' worth of bonds with a 30-year duration will be launched on a specific Friday. In addition, the government will also release bonds with 20 and 50-year durations on specified dates in May and June.
Previously, China would only issue long-term government bonds sporadically, last doing so at the onset of the coronavirus pandemic in early 2020. As calls for a comprehensive economic stimulus package for the weakened economy have increased, the situation in certain areas, such as the over-indebted real estate sector and high youth unemployment coupled with bad domestic consumer sentiment, is causing issues for businesses.
The Chinese government has aimed to achieve roughly a five percent economic growth rate by 2024, which analysts deem incredibly ambitious. The option of releasing government bonds to cover major national projects has been frequently mentioned as a potential solution. Last March, Li Qiang, the leader of the government, highlighted that debt could be employed to support key strategic undertakings.
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The Ministry of Finance announced that China will issue 138 billion dollars' worth of 30-year government bonds to support its economy's recovery. In response to economic challenges such as high youth unemployment and a struggling real estate sector, the Chinese government is employing debt to issue government bonds and cover major national projects, as suggested by Li Qiang.
Source: www.ntv.de
