China Accelerates Financial Measures to Boost Economic Stability
Enhanced fiscal policies and increased bond issuance aim to support consumer demand and infrastructure investment in the face of global uncertainties.
In 2025, China is intensifying its fiscal policies as part of its strategy to stabilize the economy amid ongoing global uncertainties.
The country has set its deficit-to-GDP ratio at 4 percent and announced a government deficit of 5.66 trillion yuan (approximately 786 billion U.S. dollars), marking the highest levels seen in recent years.
With a commitment to a more proactive fiscal stance, China plans to issue 1.3 trillion yuan in ultra-long special treasury bonds, an increase from 1 trillion yuan in 2024. Additionally, local governments are projected to issue 4.4 trillion yuan in special-purpose bonds.
Data reveals a significant ramp-up in bond issuance, with total treasury bond issuance exceeding 3.3 trillion yuan in the first quarter of 2025. Local government bond issuance surpassed 2.8 trillion yuan during the same period, representing an over 80 percent increase compared to the previous year.
The financial resources generated from these bonds are being allocated to enhance consumer demand, accelerate infrastructure projects, and provide subsidies for individuals facing financial challenges.
This approach is intended to reinforce short-term economic stability while allowing flexibility for further capital support measures and bond issuances later in the year.
In sectors improving domestic demand, for example, an electric bicycle shop in Guiyang, Guizhou Province, has experienced a notable rise in customer traffic due to a government-supported trade-in program.
The program incentivizes consumers to exchange used bikes for new ones, resulting in a 15 percent increase in sales year-on-year, as reported by the store owner.
The funding for this national consumer goods trade-in initiative has doubled from 150 billion yuan in 2024 to 300 billion yuan in 2025.
As of late April, over 120 million consumers have benefitted from subsidies under this program, driving total sales to exceed 720 billion yuan.
Retail sales reported a 4.6 percent increase year-on-year in the first quarter, with March alone witnessing the strongest monthly growth since 2024.
Investment in infrastructure is being expedited, supported by financial resources directed to local governments.
A significant transport hub project in Zhanjiang, Guangdong Province, is one such initiative.
The project, part of the Guangzhou-Zhanjiang High-Speed Railway, benefited from 1.497 billion yuan in local government special-purpose bonds to maintain construction momentum.
In the first quarter, local governments issued nearly 1.24 trillion yuan in new bonds, with around 960.3 billion yuan allocated for special-purpose projects.
The flexibility afforded to local governments to channel special-purpose bonds toward various categories aims to improve investment efficiency and responsiveness to regional needs.
Fixed-asset investment increased by 4.2 percent year-on-year in the first quarter, exceeding the annual growth rate of 2024. Infrastructure investment rose by 5.8 percent, reflecting an upturn of 1.4 percentage points from the previous year.
Analysts anticipate an accelerated issuance of bonds in the upcoming quarter, with expectations that the scale of new special-purpose bonds will expand as the government pursues fiscal expansion to mitigate external challenges.
This strategy is designed to enhance counter-cyclical adjustments and create room for future policy flexibility.
The country has set its deficit-to-GDP ratio at 4 percent and announced a government deficit of 5.66 trillion yuan (approximately 786 billion U.S. dollars), marking the highest levels seen in recent years.
With a commitment to a more proactive fiscal stance, China plans to issue 1.3 trillion yuan in ultra-long special treasury bonds, an increase from 1 trillion yuan in 2024. Additionally, local governments are projected to issue 4.4 trillion yuan in special-purpose bonds.
Data reveals a significant ramp-up in bond issuance, with total treasury bond issuance exceeding 3.3 trillion yuan in the first quarter of 2025. Local government bond issuance surpassed 2.8 trillion yuan during the same period, representing an over 80 percent increase compared to the previous year.
The financial resources generated from these bonds are being allocated to enhance consumer demand, accelerate infrastructure projects, and provide subsidies for individuals facing financial challenges.
This approach is intended to reinforce short-term economic stability while allowing flexibility for further capital support measures and bond issuances later in the year.
In sectors improving domestic demand, for example, an electric bicycle shop in Guiyang, Guizhou Province, has experienced a notable rise in customer traffic due to a government-supported trade-in program.
The program incentivizes consumers to exchange used bikes for new ones, resulting in a 15 percent increase in sales year-on-year, as reported by the store owner.
The funding for this national consumer goods trade-in initiative has doubled from 150 billion yuan in 2024 to 300 billion yuan in 2025.
As of late April, over 120 million consumers have benefitted from subsidies under this program, driving total sales to exceed 720 billion yuan.
Retail sales reported a 4.6 percent increase year-on-year in the first quarter, with March alone witnessing the strongest monthly growth since 2024.
Investment in infrastructure is being expedited, supported by financial resources directed to local governments.
A significant transport hub project in Zhanjiang, Guangdong Province, is one such initiative.
The project, part of the Guangzhou-Zhanjiang High-Speed Railway, benefited from 1.497 billion yuan in local government special-purpose bonds to maintain construction momentum.
In the first quarter, local governments issued nearly 1.24 trillion yuan in new bonds, with around 960.3 billion yuan allocated for special-purpose projects.
The flexibility afforded to local governments to channel special-purpose bonds toward various categories aims to improve investment efficiency and responsiveness to regional needs.
Fixed-asset investment increased by 4.2 percent year-on-year in the first quarter, exceeding the annual growth rate of 2024. Infrastructure investment rose by 5.8 percent, reflecting an upturn of 1.4 percentage points from the previous year.
Analysts anticipate an accelerated issuance of bonds in the upcoming quarter, with expectations that the scale of new special-purpose bonds will expand as the government pursues fiscal expansion to mitigate external challenges.
This strategy is designed to enhance counter-cyclical adjustments and create room for future policy flexibility.
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