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in recent years, local governments have made significant progress by issuing bonds as their main financing channel. however, with the changes in economic policies and the adjustment of market demand, the pace of local government bond issuance has begun to slow down. data shows that since 2023, the number of local government bonds issued nationwide has declined significantly, and market expectations have also changed accordingly.
in august this year, the issuance of local government bonds accelerated significantly, indicating that the actions taken by the central government on the issuance and use of local government special bonds are taking effect. in the recently released "report on the implementation of china's fiscal policy in the first half of 2024", the ministry of finance clearly requires the acceleration of the issuance and use of local government special bonds, the formation of more physical workload, and the injection of financial support for infrastructure construction.
this phenomenon echoes the view of wen bin, chief economist of minsheng bank. wen bin believes that the issuance of local government bonds is slow. in order to ensure the use of bond funds within the year, various departments and regions have actively deployed local government bond issuance. the issuance of local government bonds has accelerated significantly in august, which will support the rapid growth of infrastructure investment.
this change means that new changes are taking place in local government debt management and financing channels, which is of great significance for the future development of the market and economic structure.
new directions of capital flows
on the one hand, with the active borrowing behavior of local governments, the flow of funds has shown a clear growth trend. on the other hand, local governments are also faced with the problem of how to use funds effectively. how to ensure the efficiency of fund use and provide impetus for infrastructure construction is an important direction for the future development of the market and economic structure.
