Translation in English: With 80 billion funds arriving, the ultra-long-term spec
China's first batch of ultra-long-term special government bonds raised 80 billion yuan in May, which will be quickly allocated to major projects to accelerate construction and stabilize investment and the economy.
According to publicly available information from the Ministry of Finance, members of the underwriting consortium for the ultra-long-term special government bonds (Phase II) are required to pay the issuance proceeds into the account designated by the Ministry of Finance by May 27th. The ultra-long-term special government bonds (Phase II), which were successfully issued on the 24th, have an actual issuance face value of 40 billion yuan, with a term of 20 years and a coupon rate of 2.49%. Prior to this, the 40 billion yuan ultra-long-term special government bonds (Phase I) with a term of 30 years were also successfully issued.
So far, the total of 80 billion yuan from the two phases of ultra-long-term special government bonds in May will be accounted for today. This is only a small part of the total 1 trillion yuan of ultra-long-term special government bond funds for this year. According to the Ministry of Finance's plan, there will be 20 more phases of ultra-long-term special government bonds issued from June to November.
With the funds from the ultra-long-term government bonds in place, the construction of related projects will also be accelerated.
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Li Chao, Deputy Director of the Policy Research Office of the National Development and Reform Commission, stated at a press conference on the 21st that the National Development and Reform Commission has prepared the first batch of ultra-long-term special government bond projects that can be immediately invested. Once the bond funds are in place, construction can be accelerated.
The state has clarified that the special government bonds for ultra-long-term will be specifically used for the implementation of national major strategic initiatives and the construction of safety capabilities in key areas (hereinafter referred to as "two major" constructions), focusing on accelerating the realization of high-level scientific and technological self-reliance and strength, promoting the integrated development of urban and rural areas, promoting coordinated regional development, enhancing the security of food and energy resources, promoting high-quality population development, and comprehensively advancing the construction of a beautiful China.
Out of the 1 trillion yuan of ultra-long-term special government bond funds this year, while the central finance will use 500 billion yuan, the remaining 500 billion yuan will be transferred to local governments for use. Against the backdrop of significant fiscal revenue and expenditure contradictions and strict debt supervision, various regions have been actively applying for special government bond projects that meet the "two major" construction requirements to compete for larger quotas and promote local economic development.
Li Chao stated at the aforementioned meeting that the next step for the National Development and Reform Commission is to accelerate the screening of projects and the issuance of plans, organize various localities and relevant central units to submit projects as required, and work with industry management departments to screen projects. He urged guidance for localities to intensify preliminary work, ensure land use, environmental assessment, and other elements on a graded and classified basis, and promote the commencement of construction of projects as soon as possible.
To improve the efficiency of fund use, the National Development and Reform Commission will strengthen the full life cycle management of ultra-long-term special government bond projects, formulate and issue management methods, and clarify requirements from project planning and reserve to supervision and inspection. The National Development and Reform Commission will also work with relevant departments to rely on the major project construction promotion mechanism, regularly dispatch project progress, organize on-site supervision, and promote high-quality construction and implementation of projects.
Ma Guangrong, Deputy Director of the Fiscal and Tax Research Institute at Renmin University of China, believes that the ultra-long-term special government bonds are not only conducive to boosting domestic demand and stabilizing the macroeconomy at present but also lay a solid foundation for high-quality development. When the funds from the ultra-long-term special government bonds are allocated to various regions in the form of transfer payments, attention should be paid to the negative factors that have existed in the distribution of transfer payment projects in the past, such as the lack of transparency in the distribution mechanism, low local autonomy, and the need for a large amount of matching funds from local governments. These issues not only reduce the efficiency of debt fund use but also increase the fiscal pressure on local governments to a certain extent.He stated that the "dual" areas targeted by the ultra-long-term special government bonds are mostly national public goods, which fall under the central government's responsibilities and expenditure obligations, or are shared responsibilities and expenditure obligations between the central and local governments. In the future, when issuing large-scale special government bonds, it should be synchronized with a moderate strengthening of the central government's responsibilities and expenditure obligations to prevent the excessive decentralization of responsibilities, which could lead to insufficient enthusiasm for local investment. The pressure on local governments to provide matching funds should also be reduced.
"Furthermore, while the scale of government bond issuance expands significantly, it would be better for the central government to increase the local governments' share of tax revenue, rather than transferring a large amount of funds to local governments for use. This would give local governments sufficient financial autonomy and further stimulate their enthusiasm for economic development," said Ma Guangrong.
In fact, on May 13th, during the State Council's video conference on supporting the deployment and mobilization of "dual" construction, it was emphasized that both "hard investment" and "soft construction" should be well-coordinated. Combining project construction with supporting reforms, it is necessary to not only formulate and improve plans, strengthen project management, and create a batch of landmark projects but also to optimize the supply of systems, and use reform methods and innovative measures to overcome deep-seated obstacles.
Li Chao introduced at the aforementioned meeting that one of the key tasks for the next step in "dual" construction is to accelerate the introduction and implementation of "soft construction" policies. The National Development and Reform Commission, in conjunction with relevant parties, has established a task list for "soft construction" and is actively promoting the introduction and implementation of relevant policy measures. This is done to resolve deep-seated contradictions with reform methods and innovative thinking, and to better leverage the synergistic effect of policies.
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