FX.co ★ China Ramps Up Debt Issuance

In the first quarter of 2025, China has notably ramped up its debt issuance to foster economic growth and stabilize its bond market. The Ministry of Finance has issued a net total of CNY 1.45 trillion in sovereign bonds, a figure three times greater than that recorded during the same period last year, setting a new first-quarter record, according to Bloomberg News. This substantial increase underscores Beijing’s pressing need to boost fiscal spending amidst challenges such as property market difficulties, deflationary pressures, and persistent trade tensions. This strategic move also aims to alleviate concerns from last year’s bond market rally, which had heightened financial stability risks. Despite robust growth in industrial output and mainland investment, China's economic outlook remains weighed down by sluggish property sales and loan demand. Additionally, uncertainties have been exacerbated by U.S. President Trump’s newly imposed tariffs on Chinese goods, amplifying external pressures. In response to these challenges, policymakers are planning to issue CNY 11.86 trillion in new government bonds this year, after raising the budget deficit target to an unprecedented 4% of GDP.