The Chinese government is set to issue a record 3 trillion yuan (approximately $411 billion) in special treasury bonds in 2025, the largest amount ever. This move aims to stimulate fiscal spending and help revive the country's weakening economy. The planned issuance is three times the amount allocated for 2024 and will be used for several key purposes:
Boosting Consumer Spending: The government will implement subsidy programs, such as offering discounts for consumers to exchange old cars and electronics for new ones, to drive consumption.
Supporting Businesses: Large-scale equipment upgrades and investments in advanced manufacturing sectors, including electric vehicles, semiconductors, and green energy, will be funded.
Infrastructure Development: Major infrastructure projects, such as railways, airports, and agricultural land development, will also receive funding to stimulate economic growth.
This bond issuance represents 2.4% of China's 2023 GDP, underscoring Beijing's commitment to using debt as a tool to combat deflationary pressures. However, the Chinese economy still faces significant challenges, including a real estate crisis, high local government debt, and weak consumer demand. These struggles are compounded by the potential increase in U.S. import tariffs.
At the Central Economic Work Conference (CEWC), Beijing outlined its economic growth target for 2025 at approximately 5%, along with a record budget deficit of 4% of GDP. However, these goals are still subject to approval during the National People's Congress in March.
