Beijing plans to issue a record 3 trillion yuan ($411 billion) in special treasury bonds next year to revive its faltering economy, according to sources familiar with the matter. This marks a significant increase from the 1 trillion yuan issued this year, underscoring China’s determination to counter economic challenges and deflationary pressures.
The 2025 bond issuance, the largest of its kind, aims to support domestic growth amid looming threats of increased U.S. tariffs on Chinese imports under President-elect Donald Trump. The proceeds will be directed toward initiatives such as boosting consumer spending through subsidy programs, funding innovation-driven industries, and facilitating equipment upgrades for businesses, the sources revealed.
China’s State Council Information Office and other relevant government bodies did not respond to requests for comment on the matter.
Focus on Major and New Initiatives
Around 1.3 trillion yuan of the planned issuance will target “two major” and “two new” initiatives, according to sources. The “major” initiatives include infrastructure projects such as railways, airports, and farmland development, as well as enhancing security in strategic areas. Meanwhile, the “new” programs aim to stimulate consumer spending by subsidizing trade-ins for durable goods like vehicles and appliances and supporting businesses in upgrading large-scale equipment.
The remainder of the proceeds will fund advanced manufacturing sectors, including electric vehicles, robotics, semiconductors, and green energy. Over 1 trillion yuan is expected to be allocated to these “new productive forces,” while another portion will recapitalize state-owned banks grappling with shrinking margins and rising bad loans.
Economic Challenges and Policy Responses
The announcement follows the annual Central Economic Work Conference (CEWC), where President Xi Jinping and top officials outlined priorities for 2025, emphasizing the need for steady growth and increased fiscal measures. Though specific targets for economic growth and debt issuance have not been officially disclosed, sources indicate that China plans to raise its budget deficit to a record 4% of GDP next year, maintaining a growth target of approximately 5%.
China’s economy has faced significant headwinds this year, including a prolonged property crisis, high local government debt, and sluggish consumer demand. Exports, one of the economy’s few strong points, could soon face tariffs exceeding 60% if Trump implements his campaign pledges.
Market Reaction
The announcement of the bond issuance sent China’s 10-year and 30-year treasury yields up by 1 and 2 basis points, respectively. Analysts believe the issuance will provide incremental support for economic growth. Tommy Xie, head of Asia Macro Research at OCBC Bank, described the plan as exceeding market expectations and a positive step for growth.
With domestic consumption identified as a critical growth driver, Beijing is set to expand its trade-in subsidy programs to stimulate household spending. However, weak property prices and limited social welfare remain key challenges to boosting consumer confidence.
The 2025 treasury bonds are expected to play a pivotal role in addressing these issues, offering a lifeline to an economy seeking stability and innovation-driven growth.
