Commentary: How China’s Ultra-Long Bonds Will Impact the Economy

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This year’s issuance of China’s ultra-long special treasury bonds will total 1 trillion yuan, with the proceeds earmarked for implementing key national strategies and building up security capabilities in key areas.

The first issuance of China’s ultra-long special treasury bonds this year took place on May 17, raising questions about how they will impact the bond market and the wider economy.

The issuance is part of a multiyear program announced in March by Premier Li Qiang in his government work report. This year’s total issuance will reach 1 trillion yuan ($138 billion). The proceeds are earmarked for implementing key national strategies and building up security capabilities in key areas.

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China issued ultra-long special treasury bonds totaling 1 trillion yuan ($138 billion) in 22 installments from May to November 2023.
These bonds have maturities of 20, 30, and 50 years to improve the interest rate curve and serve as a reference for pricing other bonds.
The issuance aims to support national strategies and economic growth, anticipating a boost of about 0.6 percentage points to GDP, with major banks as primary buyers.

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Who’s Who

Huatai Securities Co., Ltd.: Huatai Securities Co., Ltd. is a leading financial services company in China. It offers a comprehensive range of services including brokerage, investment banking, asset management, and proprietary trading. Zhang Jiqiang, a vice director of their research team, contributed insights about China's ultra-long special treasury bonds in the article.

Wind Information Co., Ltd.: Wind Information Co., Ltd. is cited as an economic data dealer in the article. It provided data indicating that local government financing vehicles (LGFV) experienced negative net bond financing each month from February to April, highlighting constraints on investment growth.

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