China's monetary policymakers are set to issue a record 3 trillion yuan (approximately $411 billion) in special government bonds in 2025, aiming to stimulate an economy showing signs of slowdown.
The funds raised will be allocated for consumer subsidies, upgrading business equipment, and investing in key technologies and advanced manufacturing sectors.
This fiscal stimulus is expected to safeguard the world's second-largest economy against anticipated challenges from the incoming U.S. administration led by Donald Trump, which has threatened to impose high tariffs on Chinese imports.
Following this announcement, the CSI 300 index rose about 1% before retracting some gains. Meanwhile, Chinese government bonds continued to decline, with the 10-year yield increasing by four basis points to 1.72%, up from a record low in the previous trading session.
China's special government bonds are issued for specific purposes, such as financing the costs of mitigating pandemic effects, and are therefore not included in the main budget deficit. The potential bond sale size will exceed the 1 trillion yuan sold this year, marking the largest issuance to date.
Approximately 1.3 trillion yuan of the raised funds will support consumer goods and business equipment trade programs, as well as large construction projects.
Additionally, over 1 trillion yuan will be allocated for investment in 'new manufacturing forces', referring to advanced sectors such as electric vehicles.
The remaining funds will be used for recapitalizing major state banks facing declining profit margins.