In a bold move to bolster its faltering economy, Chinese authorities have agreed to issue a record 3 trillion yuan ($411 billion) worth of special treasury bonds in 2025, sources with knowledge of the matter revealed. This unprecedented step marks a significant increase from the 1 trillion yuan issued in 2024, as Beijing ramps up fiscal stimulus to counter economic headwinds and deflationary pressures in the world’s second-largest economy.
The proceeds from the bond issuance are slated to target key sectors, including consumer subsidies, advanced manufacturing, and infrastructure development.
Officials plan to allocate significant funds to “two major” and “two new” programmes aimed at boosting domestic consumption and driving innovation in high-tech industries, such as electric vehicles, robotics, and semiconductors.
As part of the “two new” initiatives, subsidies will be provided for consumers trading in old cars or appliances for discounted new ones. Businesses will also receive funding for large-scale equipment upgrades to modernize operations.
Meanwhile, the “two major” projects will focus on national infrastructure, including railways, airports, and farmland development, alongside enhancing security in critical areas.
Approximately 1.3 trillion yuan will fund these programmes, while over 1 trillion yuan is earmarked for investments in advanced manufacturing. Additionally, part of the proceeds will be used to recapitalize state-owned banks facing shrinking profit margins and rising bad loans.
The planned issuance comes amid growing economic challenges, including a severe property crisis, high local government debt, and weak consumer demand. Beijing also faces potential trade disruptions as U.S. President-elect Donald Trump’s administration plans to increase tariffs on Chinese imports by over 60%.
The special treasury bonds, amounting to 2.4% of China’s 2023 GDP, highlight Beijing’s readiness to deepen its fiscal deficit. This follows the recent Central Economic Work Conference (CEWC), where top officials emphasized the need for steady economic growth and increased government debt.
Although China has set an ambitious economic growth target of 5% for 2025, analysts warn that weak household demand and falling property prices could pose significant risks. Expanding trade-in programmes and boosting innovation-driven sectors are expected to play a crucial role in stabilizing the economy.
Official confirmation of the bond issuance and other fiscal targets is expected at the annual parliamentary meeting in March 2025. Until then, Beijing remains focused on implementing measures to sustain growth amid domestic and global uncertainties.