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

By Han Yu

On March 31, 2026 Sichuan Province special-purpose government bonds (Tranches 12 to 17) completed tender-based issuance. The total issuance size was CNY 2.09B, all of which were newly issued bonds. The raised funds are intended for areas including infrastructure development, agriculture, forestry, and water conservancy, and education. On the same day, 2026 Sichuan Province general government bonds (Tranche 2) also completed tender-based issuance, with a size of CNY 20.9048 billion. The raised funds are intended for areas including transportation infrastructure and social programs.

By this point, this year’s local government bond issuance in the first quarter concluded successfully. According to Wind data, in the first quarter this year, the issuance scale of local government bonds across regions reached CNY 3.11T, up 9.3% year over year from the first quarter of 2025 (CNY 2.84T). Meanwhile, in the first quarter this year, the issuance pace of newly issued special-purpose bonds accelerated significantly. The scale reached CNY 1.16T, up 20.8% from the first quarter of 2025 (CNY 960.2B).

Experts interviewed by Securities Daily said that the faster issuance of local government bonds, especially newly issued special-purpose bonds, in the first quarter reflects a more proactive approach to fiscal policy moving forward, which will provide strong support for stabilizing growth.

Judging from the uses of funds of newly issued special-purpose bonds, in the first quarter this year, a larger share of funds flowed into directions including municipal and industrial park infrastructure, transportation infrastructure, shantytown redevelopment, land reserves, and livelihood services. Among them, the size of newly issued special-purpose bonds allocated to municipal and industrial park infrastructure reached CNY 550.6 billion, accounting for 47.5% of the total (CNY 1,159.9 billion), the highest share. The sizes allocated to transportation infrastructure, shantytown redevelopment, land reserves, and livelihood services were CNY 182.1 billion, CNY 96.5 billion, CNY 78.3 billion, and CNY 58.1 billion, respectively, with corresponding shares of 15.7%, 8.3%, 6.8%, and 5.0%.

Yuan Shuai, deputy secretary-general of the Zhongguancun Internet of Things Industry Alliance, told Securities Daily that judging from newly issued special-purpose bonds, in the first quarter the issuance scale increased by nearly 21% year over year, and large amounts of funds were directed to areas such as municipal and industrial park infrastructure, transportation infrastructure, shantytown redevelopment, and livelihood services—directly targeting the key nodes of the current economic operations.

It is worth noting that alongside the accelerated issuance of newly issued special-purpose bonds, the refinancing special-purpose bonds used to replace existing stock of hidden debts (hereinafter “replacement bonds”) also saw faster issuance. In the first quarter, the replacement bond issuance scale reached CNY 960.4 billion across regions, accounting for nearly half of the planned issuance size for the year (CNY 2 trillion).

Song Xiangqing, vice president 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 issuance, reflecting a balanced approach of stabilizing growth while preventing risks. Specifically, the issuance of newly issued special-purpose bonds quickly forms physical workload, boosts infrastructure investment, and also provides funding support for major projects. The replacement bond issuance is close to half of the full-year plan, which can effectively mitigate local government debt risk, optimize the debt structure, and achieve multiple goals such as stabilizing investment, addressing weak links, and managing risks.

Yuan Shuai also said that in the first quarter, the issuance scale of replacement bonds was close to half of the full-year plan, which conveys a clear “risk-prevention” signal. By issuing low-cost refinancing bonds to replace high-cost hidden 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 sound and steady operation of local government finances.

While completing first-quarter issuance, regions also gradually disclosed their second-quarter local government bond issuance plans. For example, Tianjin’s table of its second-quarter local government bond issuance plans shows that in the second quarter Tianjin planned to issue CNY 114.30648 billion in local government bonds, of which newly issued special-purpose bonds were CNY 20k.

Wind data shows that as of March 31, the total planned issuance scale for second-quarter local government bonds disclosed by regions reached CNY 2,284.2 billion, of which newly issued special-purpose bonds were CNY 723.9 billion, 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 issuance schedule appears steady, the structure is optimized, and the momentum continues. Structurally, the share of newly issued special-purpose bonds is moderate. It both continues to support key areas such as infrastructure and people’s livelihoods, and also leaves room for refinancing bonds, balancing project construction needs with debt follow-on requirements. This arrangement both consolidates the achievements in stabilizing growth from the first quarter and provides ongoing funding support for steady economic operation throughout the year.

(Editor: Wen Jing)

Keywords:

                                                            Local government bonds