China Issues Ultra-Long-Term Sovereign Bonds to Sustain Local Governments

American economist Davy Jun Huang said that local government debt in China is enormous, creating an unprecedented financial predicament.

Headquarters of the People's Bank of China (PBOC), the Chinese communist regime's central bank, is pictured in Beijing, China, on September 28, 2018. Jason Lee/Reuters

China’s Ministry of Finance announced plans on May 13 to issue ultra-long-term special treasury bonds starting this year, with an initial issuance of 1 trillion yuan ($138 billion). Chinese state media reported that the funds would address local government financial difficulties and ensure their expenditures.

This year’s ultra-long-term sovereign bonds have terms of 20, 30, and 50 years. During the Chinese Communist Party’s (CCP) “Two Sessions” in March, Premier Li Qiang stated that such bonds would be issued annually for several years, highlighting the long durations and the unprecedented 50-year repayment period.