The Chinese economy has faced challenges in recent years, such as deflation, stagnant growth, and a property market crisis. To address these issues, the government has announced plans to sell $138 billion in long-dated sovereign bonds. This move is aimed at reigniting the country’s faltering economy by raising funds for major national strategies and enhancing security capacity in key areas.
The finance ministry revealed that China will begin selling 30-year sovereign bonds worth 40 billion yuan ($5.5 billion) this week, with the goal of raising a total of 1 trillion yuan ($138 billion) through multiple sales. This marks the first time since 2020 and only the fourth time in the past 26 years that China has raised debt through the sale of long-dated bonds. The decision to issue ultra-long sovereign bonds was announced in March by Premier Li Qiang, who emphasized the need to address significant risks facing the economy while setting a growth target of 5%.
Despite facing challenges such as insufficient demand, overcapacity in certain industries, weak societal expectations, and lingering risks from the pandemic, China remains focused on achieving economic recovery and improvement. The country’s economy has been impacted by numerous factors including a property market crisis resulting in large developer collapses like Evergrande and Country Garden. Li’s announcement of the long-duration bond sale underscores the government’s commitment to supporting economic growth and addressing key challenges to ensure future stability and prosperity.
