China Issues One Trillion Yuan in 2020 Special Bond Quotas in Advance, Highlights Infrastructure Investment Ambitions

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The Chinese central government has launched new policy initiatives with the hope of “stabilising investment levels,” with an especial focus on domestic infrastructure development.

On 27 November China’s Ministry of Finance (MOF) issued 1 trillion yuan in 2020 special bond quotas in advance, equal to 47% of the annual new special bond quota of 2.15 trillion yuan for 2019.

MOF requested that all regional authorities apply the special bond quotas to specific projects as soon as possible, calling for “early issuance and early usage ” in order to ensure that the projects can have an impact by the start of next year.

On 27 November the State Council issued the “Notice Concerning Strengthening Capital Management for Fixed Asset Investment Projects” (关于加强固定资产投资项目资本金管理的通知), reducing the minimum project capital ratio for ports and coastal and riverine shipping projects from 25% to 20%.

The Notice also permits a reduction in the minimum capital ratio of up to five percentage points for infrastructure projects in other “shortcoming areas,” as long as they satisfy requirements with regard to revenue and repayment levels.

On 28 November a senior figure from the National Development and Reform Commission (NDRC) said that at present China’s per capita infrastructure stock level is equal to 20 – 30% of advanced Western nations, and that there are still major deficits in areas including transportation, energy, water conservation, environmental protection and social welfare.

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