China’s top legislature has agreed to let local governments use up part of their annual bond quotas ahead of the usual schedule, in another bid to aid funding for important state-run projects.
The Standing Committee of the National People’s Congress (NPC) signed a bill allowing local governments to issue Rmb 1.39 trillion ($209 billion) in bonds before the general meeting in March where quotas are usually approved, according to Caixin. This concession may be re-implemented each year through 2022.
By waiting until the March session to begin issuances, local governments usually hand out the majority of their bond quotas in the second half of the year. Beijing, meanwhile, is keen to accelerate the process amid a slowdown driven partly by weaker credit growth.
Many local governments are facing challenges in raising new funds for infrastructure projects which make up a key component of domestic activity. Authorities are handling piles of debt while some major revenue streams, such as land sales, are being impacted by the slowdown.