China’s finance ministry has asked local governments to speed up the issuance of special-purpose bonds by the end of June in a bid to provide more support to its cooling economy.
The ministry said in a meeting Monday that local governments should “basically complete” issuance of special-purpose bonds for 2022 by the end of June and use the raised funds by the end of August.
The special-purpose bond is a type of debt raised to fund government-led infrastructure projects. Monday’s call to accelerate the use of the funds is expected to quickly expand government-led spending and buoy investment and other economic activity.
The finance ministry said in a statement that local governments had issued 1.85 trillion yuan ($277.73 billion) worth of special-purpose bonds as of May 27, which was CNY1.36 trillion higher than in the same period a year ago and accounted for 54% of the annual quota set earlier this year.
The ministry also repeated that it would lower the vehicle purchase tax, a move that is expected to generate savings of CNY60 billion in taxes this year and boost auto consumption.
The ministry’s pledge by comes days after Chinese Premier Li Keqiang called for bigger efforts to bolster an economy that has been dragged down by local Covid-19 outbreaks and stringent measures to control the virus.
Major economic indicators retreated sharply in April when China locked down its biggest commercial center, Shanghai. Economic activity remained subdued in May despite some slight improvements.
Premier Li said in a meeting last week that the economic challenges facing China now are even bigger than those it dealt with in 2020 when the initial Covid-19 outbreaks ground the economy to a near-halt.
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