Special Bonds Expand Scope to Stabilize Economy

The latest statistical data from relevant departments show that in the first nine months of this year, 3.6 trillion yuan of new special-purpose bonds were issued, supporting more than 30,000 projects and using over 260 billion yuan as project capital. With the remaining quota and unused funds already issued, there will be 2.3 trillion yuan of special-purpose bond funds available for use in various regions in the last three months of this year. As an important tool to increase the counter-cyclical adjustment strength of fiscal policy, special-purpose bonds will further expand their scope and improve quality, better playing their role in driving effective investment expansion and stabilizing the overall macroeconomic situation.

Expanding the Scope of Use

The person in charge recently stated that they will study and improve the management of the special-purpose bond investment list, increase the fields that can be used as project capital, and maximize the scope of use.

"It can be seen that a new key area for the use of special-purpose bond funds is to support and promote the real estate market to stop falling and stabilize, playing a role in easing local debt pressure, increasing fiscal revenue, activating the land market, and resolving financial risks," said Feng Beilun, a researcher at the Financial Research Center of the Chinese Academy of Fiscal Sciences.

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This year, in conjunction with relevant departments, the fields of special-purpose bond investment and the scope of project capital have been continuously optimized and adjusted, including more new energy, new infrastructure, and new industry fields into the scope of special-purpose bond investment. "Independent new energy storage," "comprehensive management of water environment in key river basins," and others have been included in the scope of special-purpose bond support, guiding localities to increase support for "national-level industrial park infrastructure," "5G integrated application facilities," "urban village transformation," "affordable housing," "college student dormitories," and other fields. At the same time, "affordable housing" and others have been included in the scope of special-purpose bonds as project capital, further leveraging the catalytic effect of special-purpose bonds.

"The issuance of special-purpose bonds in August and September this year has significantly accelerated, and it is expected to complete the annual issuance task ahead of schedule. Accelerating the issuance and use of special-purpose bonds, while optimizing and adjusting the fields of investment, will strongly support stable growth and risk prevention, and more effectively play the role of fiscal counter-cyclical regulation," said Feng Beilun.

Focusing on Project Quality

Improving project quality is key to better leveraging the effectiveness of special-purpose bonds. Together with relevant departments, policies and systems for the management of special-purpose bonds have been established and improved, guiding localities to enhance the quality of special-purpose bond projects. Since 2020, a total of 18.7 trillion yuan of new special-purpose bonds have been arranged, supporting about 130,000 government investment projects. In 2024, 3.9 trillion yuan of new special-purpose bonds are arranged, the largest scale in history.

This year, various regions have strengthened research and exploration, further improving the management mechanism of special-purpose bond projects. The Anhui finance department has improved the "three rounds" mechanism of municipal pre-evaluation, provincial finance and development and reform department pre-conditions review, and expert centralized review, and included investment fields with project revenue far lower than expected into the "blacklist" to improve the maturity of special-purpose bond project reserves. The Gansu finance department has adopted a "report as you go, review as you go," "review as you go, issue as you go" mechanism to accelerate the progress of bond issuance, while also opening a green channel for funds, promoting the rapid formation of physical work volume for key projects determined by the budget.

"Currently, relevant departments are studying the pilot of independent review authority for special-purpose bond projects, implementing a 'green channel' for continuous construction projects, etc. These series of measures are to expand the local autonomy of special-purpose bond management as much as possible under the principle of coordinating development and security. This will further mobilize local enthusiasm, optimize and improve the management of special-purpose bonds, and promote the improvement of the quality of special-purpose bond projects," said Wang Dehua, a researcher at the Institute of Fiscal Strategy of the Chinese Academy of Social Sciences.The person in charge stated that efforts will be made to study and improve the project management mechanism, open up a "green channel" for ongoing projects, promote the effective connection between project planning and reserve construction, accelerate the issuance and use of special bonds, and speed up the progress of project construction to quickly form physical work volume, effectively playing the role of government investment in guiding and driving.

Strengthen Risk Prevention and Control

At present, China has established a systematic framework covering all aspects of "borrowing, using, managing, and repaying" special bonds, conducting full-life-cycle performance management of special bond projects, and implementing through-the-cycle monitoring of project implementation, continuously strengthening the risk prevention and control of special bonds.

Full-chain penetration and full-process supervision are important methods for localities to strictly manage special bond funds. In Xuzhou, Jiangsu, the financial department calculates the demand for bond funds for each batch according to requirements such as estimated engineering volume, contract payment nodes, and the use of issued bond funds, ensuring both the rigid expenditure of key areas and key projects, and preventing risks such as fund sedimentation and misappropriation. In Loudi, Hunan, the financial department introduced a provisional method for the management of special bond funds this year, proposing that industry authorities regularly coordinate the implementation of special bond projects, implement full-life-cycle performance management for special bond projects, and promptly disclose government debt-related information.

"Special bond projects should be subject to through-the-cycle dynamic monitoring and full-life-cycle performance management, and the management responsibilities of competent departments and project units should be strengthened, with enhanced construction, operation management, and debt repayment management," said Professor Jifu Xing from the University of Chinese Academy of Social Sciences. He emphasized the need to fully incorporate the income and expenditure of special bonds into the integrated budget management scope, strictly prohibiting behaviors such as "replacing expenditure with allocation" and "allocating and forgetting."

It is reported that next, the Ministry of Finance will improve the full-life-cycle management of "borrowing, using, managing, and repaying" special bonds, strengthen the supervision of bond fund expenditures, and implement the responsibilities of project competent departments and project units. At the same time, a complete and improved asset ledger for special bond projects will be established, with classified management of project assets to ensure the balance between government liabilities and project assets. In addition, the exploration of an early repayment mechanism for special bonds will be conducted, and the establishment of a debt repayment reserve fund system will be researched to ensure the source of special bond repayments.