What makes China’s treasury bonds ‘special’ as nation eyes quality growth?

Illustration: Tang Tengfei/GT

Illustration: Tang Tengfei/GT

The issuance of China’s ultra-long special treasury bonds has given those concerned about the nation’s economy a glimpse of the country’s pursuit of Chinese modernization through high-quality development.

Yet regrettably, opportunistic individuals on the outside seized the opportunity to chant about the “collapse of the Chinese economy.” Such allegations are ridiculous. 

China’s plan to issue the first batch of 1 trillion yuan ($140 billion) in ultra-long-term treasury bonds starting on Friday will help shore up investment and spur consumption, but this doesn’t mean the Chinese economy is facing numerous difficulties and challenges that require serious measures to stimulate growth.

Some Western commentators claim that China’s 2024 growth target of about 5 percent has put pressure on the nation to unleash more stimulus. Such a misreading reflects Western elites’ serious lack of understanding of China’s economic development.

China’s GDP grew by 5.3 percent in the first quarter of 2024, well above market expectations. Steady growth lays a solid foundation for the economy to achieve the target of growing by about 5 percent for the whole year.

China’s 5.3 percent growth in the first quarter was much higher than what many Western economies achieved in the same period. It’s a little bit ironic that while Western elites said “the Chinese economy is on the verge of collapse,” an indisputable fact is that China remains a major driving force for economic growth in the Asia-Pacific region and the world. 

That is not to say China faces no challenges and risks at all. Countries as large as China – and the entire world, for that matter – face mounting challenges and risks such as increasing geopolitical tensions, lower demand in developed countries, an uptick in trade restrictions and elongated supply chains.

In the face of challenges, China is actually making honest efforts to tackle them. As the world’s second-largest economy, China has been able to maintain economic stability.

There is no doubt that the issuance of China’s ultra-long special treasury bonds will help stabilize market expectations, elevate market confidence and inject new momentum into the Chinese economy, but this is not the whole story. The bonds are designed to be used to “support the implementation of major national strategies,” which makes them different from previous special treasury bonds.

To build a modern socialist country in all respects, we must, first and foremost, pursue high-quality development. The economy is undergoing a transition from old to new growth drivers, in which the optimization of structure, and the robust development of new quality productive forces, provide limitless possibilities.

Policies to encourage economic development are different in different eras of history. With the continuous growth of the Chinese economy, it is imperative to enhance and improve macroeconomic regulation with innovative tools and ideas to support long-term high-quality development. The issuance of China’s ultra-long special treasury bonds is an attempt to adapt to an optimized and upgraded economic structure and economic needs of the country.

The Government Work Report of 2024, which was approved during the two sessions earlier this year, stated that in order to “systematically address funding shortages facing some major projects for building a great country and advancing national rejuvenation,” it was proposed that, starting this year and over each of the next several years, ultra-long special treasury bonds be issued. 

“These bonds will be used to implement major national strategies and build up security capacity in key areas,” the report said.

China has turned to special treasury bonds before, in 1998, 2007 and 2020.

This issuance of China’s new ultra-long special treasury bonds is different from previous bond issuances, because the funds raised through the new bond sales are reportedly set to support scientific and technological innovation, integrated urban-rural development, coordinated regional development, food and energy security, and the high-quality development of the population.

The plan to issue new ultra-long special treasury bonds from 2024 is a proactive approach to pursue high-quality development and develop new quality productive forces, instead of forced measures to stimulate a “stagnant economy.”

The author is a reporter with the Global Times. [email protected]