Market Analysis

China to Boost Treasury Bond Funding for Economic Growth in 2025

Amos Simanungkalit · 03 Jan35.3K Views

Image Credit: Reuters

China plans to significantly increase funding from ultra-long treasury bonds in 2025 to boost business investment and consumer-focused initiatives, according to a state planner official on Friday. This move is part of Beijing's strategy to stimulate the economy.

Yuan Da, deputy secretary-general of the National Development and Reform Commission (NDRC), stated that the funds from special treasury bonds will support two new initiatives aimed at stimulating consumption and business investment. These initiatives include a subsidy program for consumers to trade in old cars or appliances for discounts on new ones, and a program to help businesses upgrade large-scale equipment.

Additionally, subsidies will be provided for households to purchase digital products such as cell phones, tablets, smartwatches, and bracelets.

In December 2024, the NDRC reported that all proceeds from 1 trillion yuan in ultra-long special treasury bonds had been allocated, with around 70% funding major projects, and the remaining portion going towards the new initiatives. For 2025, China plans to increase funding for these programs and expand their scope, with projects valued at 100 billion yuan already approved.

The major programs focus on infrastructure projects such as railways, airports, farmland construction, and enhancing security in critical areas.

Amid challenges like the ongoing property crisis, local government debt, and weak consumer demand, China’s economy has faced difficulties. However, export growth could be further hindered by potential U.S. tariffs under President Trump's second term.

Authorities are set to issue 3 trillion yuan worth of special treasury bonds in 2025, the largest amount on record. As part of its economic recovery efforts, China is also expected to raise the budget deficit to 4% of GDP and maintain a growth target of around 5% for the year.

Yuan expressed confidence in China's ability to drive economic recovery despite challenges, noting that ample policy space exists to support growth. Additionally, China's central bank is expected to lower interest rates from the current 1.5% at an appropriate time in 2025 to further stimulate growth.