By Special Correspondent

China plans to issue large volumes of government bonds in 2026 to support investment and infrastructure development, according to the draft central and local budgets submitted to the national legislature.

The report states that new government debt will be maintained at a considerable scale in 2026, while the structure of government bonds will be adjusted to improve their effectiveness in supporting economic development.

A ceiling of 4.4 trillion yuan will be set for new local government special-purpose debts. These bonds will be used to support the construction of major projects, replace hidden debts and settle overdue payments owed by governments.

In addition, the central government will issue 1.3 trillion yuan in ultra-long special treasury bonds. These bonds will continue to support the implementation of major national strategies and strengthen security capacity in key areas.

Part of the funds raised through ultra-long treasury bonds will also be used to support large-scale equipment upgrades and consumer goods trade-in programs.

The report states that these bonds will provide continued support for the implementation of national strategies and major development projects.

In addition, 300 billion yuan in special treasury bonds will be issued to support large state-owned commercial banks in replenishing their core tier-1 capital.

Authorities will coordinate the use of ultra-long special treasury bonds, local government special-purpose bonds and investment from the central government budget to expand effective investment.

The report notes that funds raised through government bonds will be used to support the development of new quality productive forces, new urbanization and projects aimed at promoting well-rounded personal development.

Ultra-long treasury bonds totaling 800 billion yuan will be allocated to support the implementation of major national strategies and strengthen security capacity in key areas.

Authorities will also continue to promote the integration of investments in hard and soft infrastructure and raise the standards of central government investment subsidies across various categories.

The report states that the scope of trials allowing the issuance of special-purpose bonds following provincial-level review and approval will be adjusted as appropriate, while provincial governments will be encouraged to strengthen coordination in the allocation and use of bond funds.

Special-purpose bonds used for project capital will be managed separately, and funds will be directed toward localities where projects are well prepared and can be effectively utilized.

According to the report, the central government budget will include 755 billion yuan in investment funds in 2026, representing an increase of 20 billion yuan compared with the previous year.

Authorities will also strengthen monitoring over government investment funds throughout the entire process, including allocation, release and utilization of funds.

The report notes that sufficient project reserves will be established to ensure projects are mature and ready for implementation, so funds can be used effectively rather than remain idle.

Credit: INP-WealthPk