This aerial photo taken on Sept. 2, 2023 shows the fishway and supporting facilities at the auxiliary dam of the Dateng Gorge Water Conservancy project in Guiping City, south China's Guangxi Zhuang Autonomous Region. (Xinhua/Cao Yiming)
BEIJING, Oct. 26 (Xinhua) -- China's additional 1-trillion-yuan (about 139.3 billion U.S. dollars) government bonds to be issued in the fourth quarter could expand effective demand and help put economic growth off to a good start in 2024, analysts say.
The issuance was approved Tuesday by the National People's Congress Standing Committee, along with a decision to adjust the 2023 central budget plan. The Ministry of Finance said on Wednesday that the issuance will lift the country's 2023 budget deficit ratio from 3 percent to around 3.8 percent, still within a reasonable range.
The funds raised will mainly go into flood prevention and disaster relief, fast-tracking major flood-control projects, and improving China's grain production, as well as its capacity to respond to droughts, authorities said.
A leadership meeting in August urged efforts to improve the country's disaster prevention, mitigation, and relief capabilities after some regions were hit by rainstorms, floods, and typhoons. Officials say the new bonds are necessary to support the causes.
Analysts say the move is also a booster for market confidence. "The additional bond overshot market expectations to signal the country's pro-growth commitment," said Luo Zhiheng, chief economist of Yuekai Securities.
It will shore up infrastructure construction and drive overall demand to lay a solid foundation for economic operations in the fourth quarter and the next year, Luo said.
Half of the funds raised are planned for use this year, and the other half for next year. This means that the effects of pro-growth policies will last at least throughout the first half of 2024, and the economy's inherent growth impetus will be rejuvenated, said Wang Qing, an analyst at Golden Credit Rating.
All of the funds will go to local governments through the transfer payment mechanism, which analysts say will ease fiscal strains on local governments and optimize the country's debt structure.
In another act of strengthened fiscal support for the economy, China will allow local governments to front-load part of their 2024 bond quota to maintain steady investment, expand domestic demand, and strengthen weak links.
This could create more favorable conditions for economic recovery by boosting infrastructure investment in the fourth quarter and maintaining its scale at the beginning of 2024, Wang said.
China's fixed-asset investment reached about 37.5 trillion yuan in the first three quarters of 2023, up 3.1 percent year on year. Of the total, investment in infrastructure construction climbed 6.2 percent, official data showed.
Chinese officials have voiced confidence about achieving the annual economic growth target of 5 percent, citing the economy's recovery momentum and gradual effects of pro-growth policies.
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