China has initiated its inaugural series of special sovereign bonds slated for 2025 to mitigate economic strain caused by rising trade tensions with the United States. The Ministry of Finance aims to garner CNY 286 billion (approximately S$51.6 billion) through a tripartite issuance designed to support a fiscal strategy sanctioned in March. Unlike conventional sovereign bonds, these special bonds are allocated for targeted uses and are exempt from contributing to China's substantial 4% fiscal deficit threshold.
The issuance plan comprises CNY 165 billion in five-year bonds intended to bolster capital in beleaguered state-owned banks experiencing narrowing profit margins. Additionally, China intends to release CNY 50 billion in 20-year bonds and CNY 71 billion in 30-year bonds. This initiative is part of a comprehensive strategy to circulate CNY 500 billion of such bonds by June 4, followed by CNY 1.3 trillion in ultra-long special sovereign notes through October. This strategy reflects Beijing's determination to escalate expenditure and support its 5% growth ambition amidst impending 145% U.S. tariffs.
