Q1 local bond issuance exceeds 3 trillion yuan, providing strong support for steady growth

On March 31, 2026 Sichuan provincial special-purpose government bonds (Rounds Twelve to Seventeen) completed competitive bidding and issuance. The total issuance size was 233.6960 billion yuan, all of which were newly issued bonds. The proceeds are intended for infrastructure construction, agriculture, forestry, water conservancy, and education, among other areas.

On the same day, 2026 Sichuan provincial general government bonds (Phase Two) also completed competitive bidding and issuance. The size was 20.9048 billion yuan. The proceeds are intended for transportation infrastructure, social programs, and other areas.

By this point, this year’s first-quarter local government bond issuance has wrapped up successfully. According to Wind data, in the first quarter this year, local governments issued local government bonds totaling 31,059 billion yuan, up 9.3% year on year from the first quarter of 2025 (28,421 billion yuan). At the same time, issuance of newly issued special-purpose bonds accelerated significantly, reaching 11,599 billion yuan, up 20.8% from the first quarter of 2025 (9,602 billion yuan).

Experts interviewed by Securities Daily said that the acceleration in the issuance of local government bonds in the first quarter—especially newly issued special-purpose bonds—reflects a more proactive approach of fiscal policy moving into action earlier, providing strong support for maintaining steady growth.

Judging by the use of funds from newly issued special-purpose bonds, in the first quarter this year, more funding went to directions such as municipal and industrial park infrastructure, transportation infrastructure, affordable housing/eviction-and-resettlement (shantytown) redevelopment, land reserve, and livelihood services. Among them, the size of newly issued special-purpose bonds allocated to municipal and industrial park infrastructure reached 5,506 billion yuan, accounting for 47.5% of the total (11,599 billion yuan), the highest share. The amounts allocated to transportation infrastructure, shantytown redevelopment, land reserve, and livelihood services were 1,821 billion yuan, 965 billion yuan, 783 billion yuan, and 581 billion yuan, respectively, with shares of 15.7%, 8.3%, 6.8%, and 5.0%.

Yuan Shuai, Deputy Secretary-General of the Zhongguancun Internet of Things Industry Alliance, said in an interview with Securities Daily that, based on newly issued special-purpose bonds, the issuance scale surged by nearly 21% year on year in the first quarter. Moreover, a large amount of capital flowed into areas such as municipal and industrial park infrastructure, transport and infrastructure construction, shantytown redevelopment, and livelihood services—directly targeting key junctures in current economic operations.

Of note, while newly issued special-purpose bonds accelerated their issuance, refinancing special-purpose bonds used to replace existing stock of hidden debts (hereinafter referred to as “replacement bonds”) also saw faster issuance. In the first quarter, local governments issued replacement bonds totaling 9,604 billion yuan, accounting for nearly half of this year’s planned issuance size (2 trillion yuan).

Song Xiangqing, Vice Chairman of the China Society of Business Economics, told Securities Daily that in the first quarter, both newly issued special-purpose bonds and replacement bonds accelerated their issuance, reflecting a dual focus on steady growth and risk prevention. Specifically, the issuance of newly issued special-purpose bonds quickly formed physical work volume, boosted infrastructure investment, and provided funding support for major projects. Replacement bond issuance was close to half of the full-year plan, which can effectively ease local government bond-debt risk, optimize the debt structure, and achieve multiple goals including stabilizing investment, filling shortfalls, and mitigating risks.

Yuan Shuai also said that the replacement bond issuance in the first quarter was close to half of the full-year plan, sending a clear “risk prevention” signal. By issuing low-cost refinancing bonds to swap out high-cost hidden debts, it is possible to effectively reduce local government interest burdens, optimize the debt maturity structure, and also resolve potential risks of debt default, thereby maintaining the steady and sound operation of local public finances.

While completing first-quarter issuance, local governments have also gradually disclosed their second-quarter local government bond issuance plans. For example, in the second-quarter local government bond issuance plan table released by Tianjin, it shows that Tianjin plans to issue 1143.0648 billion yuan of local government bonds in the second quarter, of which newly issued special-purpose bonds are 170.09 billion yuan.

Wind data shows that as of March 31, the disclosed second-quarter local government bond plans across regions totaled 22,842 billion yuan, among which newly issued special-purpose bonds were 7,239 billion yuan, accounting for 31.7%.

Song Xiangqing analyzed that in the second quarter, the planned issuance of local government bonds exceeded 2 trillion yuan and newly issued special-purpose bonds accounted for nearly 32%. Overall, this presents the characteristics of steady pacing, optimized structure, and a continuation of momentum. Structurally, the share of newly issued special-purpose bonds is moderate: it continues to provide funding support for key areas such as infrastructure and people’s livelihoods, while reserving room for refinancing bonds. This arrangement balances both project construction and debt rollover needs. It not only consolidates the steady-growth achievements of the first quarter, but also provides continued funding support for the economy to run smoothly throughout the year.