In the first quarter, local government bond issuance exceeded 3 trillion yuan, providing strong support for steady growth.

Reporter Han Yu

On March 31, the Sichuan Province 2026 special-purpose government bond (Tranches 12 to 17) completed bidding and issuance. The total issuance size was CNY 2.09B, all of which are newly issued bonds. The proceeds are proposed to be used for areas such as infrastructure development, agriculture, forestry and water conservancy, and education. On the same day, the Sichuan Province 2026 general government bonds (Phase Two) also completed bidding and issuance, with a size of CNY 20.9048 billion. The proceeds are proposed to be used for areas such as transportation infrastructure and social programs.

By this point, the issuance of local government bonds in the first quarter of this year has come to a successful close. Data from Wind shows that in the first quarter this year, the issuance size of local government bonds across regions reached CNY 3.11T, up 9.3% year on year from the first quarter of 2025 (CNY 2.84T). At the same time, the issuance of newly added special-purpose bonds in the first quarter this year accelerated markedly, reaching CNY 1.16T, up 20.8% from the first quarter of 2025 (CNY 960.2B).

Experts interviewed by Securities Daily reporters said that in the first quarter, local government bond issuance—especially the accelerated issuance of newly added special-purpose bonds—reflects a more proactive fiscal policy front-loaded effort, which will provide strong support for stabilizing growth.

Judging from the use of funds for newly issued special-purpose bonds, in the first quarter this year, more funds were directed to areas such as municipal and industrial park infrastructure, transportation infrastructure, slum housing renovation, land reserve, and public livelihood services. Among these, the newly issued special-purpose bond issuance size directed to municipal and industrial park infrastructure reached CNY 96.5B, accounting for 47.5% of the total (CNY 78.3B), the highest share. The issuance sizes directed to transportation infrastructure, slum housing renovation, land reserves, and public livelihood services were CNY 58.1B, CNY 965 billion, CNY 783 billion, and CNY 581 billion respectively, with shares of 15.7%, 8.3%, 6.8%, and 5.0% respectively.

Yuan Shuai, deputy secretary-general of the Zhongguancun Internet of Things Industry Alliance, said in an interview with Securities Daily reporters that, judging by newly issued special-purpose bonds, in the first quarter the issuance scale surged by nearly 21% year on year, and a large amount of funds was directed to municipal and industrial park infrastructure, transportation infrastructure, slum housing renovation, and public livelihood services—directly targeting key points in the current economic operation.

It is worth noting that while newly issued special-purpose bonds accelerated in issuance, refinancing special-purpose bonds for replacing existing stock implicit debts (hereinafter referred to as “swap bonds”) also saw faster issuance. In the first quarter, the issuance size of swap bonds across regions reached CNY 20k, accounting for nearly half of this year’s planned issuance size (CNY 2 trillion).

Song Xiangqing, vice president of the China Society of Business Economics, told Securities Daily reporters that in the first quarter, both newly issued special-purpose bonds and swap bonds accelerated issuance, reflecting a balance between stabilizing growth and preventing risks. Specifically, the issuance of newly issued special-purpose bonds both quickly forms physical workload and boosts infrastructure investment, while also providing funding guarantees for major projects. Meanwhile, the issuance of swap bonds is close to half of the full-year planned amount, which can effectively ease local government debt risk, optimize the debt structure, and achieve multiple goals including stabilizing investment, addressing shortfalls, and mitigating risks.

Yuan Shuai also said that the issuance size of swap bonds in the first quarter is close to half of the full-year plan, which sends a clear “risk prevention” signal. By issuing low-cost refinancing bonds to replace high-cost implicit debts, it is possible to effectively reduce local governments’ interest burden, optimize the debt maturity structure, and also defuse potential debt default risks, thereby maintaining the steady and sound operation of local public finances.

While completing first-quarter issuance, regions have also gradually disclosed their issuance plans for local government bonds in the second quarter. For example, Tianjin’s table of its second-quarter local government bond issuance plan shows that in the second quarter Tianjin plans to issue CNY 1143.0648 billion of local government bonds, of which newly issued special-purpose bonds are CNY 170.09 billion.

Wind data shows that as of March 31, the total planned issuance size for second-quarter local government bonds disclosed by various regions reached CNY 114.31B, of which newly issued special-purpose bonds were CNY 17.01B, accounting for 31.7%.

Song Xiangqing analyzed that in the second quarter, the planned issuance of local government bonds exceeded CNY 2 trillion, and newly issued special-purpose bonds accounted for nearly 32%. Overall, the plan shows characteristics of steady pace, optimized structure, and continued momentum. In terms of structure, the share of newly issued special-purpose bonds is moderate: it continues to provide funding support for key areas such as infrastructure and public wellbeing, while also leaving room for refinancing bonds. This balances both project construction needs and debt follow-on issuance needs. This arrangement not only consolidates the steady-growth results achieved in the first quarter, but also provides continued funding support for stable economic operation throughout the year.

(Editor: Wen Jing)

Keywords:

                                                            Local government bonds