China’s Ministry of Finance has called on local governments to speed up the issuance of special bonds in late June in order to further support their cooling economy.
The ministry said at a meeting on Monday that local governments should “basically complete” the issuance of special purpose bonds by 2022 in late June and use the funds raised in late August.
The special purpose bond is a type of debt generated to finance government-run infrastructure projects. Monday’s call to speed up the use of funds is expected to quickly expand government-led spending and boost investment and other economic activities.
The finance ministry said in a statement that local governments had issued 1.85 trillion yuan ($ 277.73 billion) in special bonds on May 27, which was 1.36 trillion CNY more than in the same period a year ago and accounted for 54% of the annual fee set at the beginning of the year.
The ministry also reiterated that it would lower the vehicle purchase tax, a measure that is expected to generate CNY 60 billion in tax savings this year and increase car consumption.
The ministry’s promise comes days after Chinese Premier Li Keqiang called for more efforts to bolster an economy that has been dragged down by local Covid-19 outbreaks and strict measures to control the virus.
The main economic indicators fell sharply in April when China closed its largest shopping mall, Shanghai. Economic activity remained moderate in May despite some slight improvements.
Prime Minister Li told a meeting last week that the economic challenges facing China are now even greater than those it faced in 2020, when the initial Covid-19 outbreaks left. economy almost stopped.
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