China's Fiscal Booster: Ultra-Long Treasury Bonds for Economic Revival

China plans to significantly boost its use of ultra-long treasury bonds in 2025, aiming to stimulate business investment and consumer spending. These bonds will fund new initiatives, including consumer subsidies for trading in durable goods and business grants for equipment upgrades. This move is part of Beijing's broader strategy to support economic growth amid challenges like weak consumer demand and high government debt.

China is set to significantly escalate its fiscal stimulus efforts by expanding the issuance of ultra-long treasury bonds in 2025, an official from the National Development and Reform Commission revealed on Friday. This strategy is designed to bolster business investment and enhance consumer-driven initiatives as Beijing addresses its slowing economy.

The treasury bonds will specifically fund two new initiatives, said Yuan Da, a deputy secretary-general at NDRC, during a press briefing. These initiatives include a trade-in program for old cars or appliances that offers consumers discounts on new purchases, alongside a subsidy for businesses upgrading large-scale equipment. Households will also receive financial aid to purchase select digital devices such as smartphones and tablets.

With China's economic challenges deepening, including a property crisis and high local government debt, the country aims to spur growth through these fiscal measures. Officials approved projects valued at 100 billion yuan for the major programmes in 2025, prioritizing infrastructure and capacity building across critical sectors. China's leaders have also endorsed an economic growth target of around 5% while preparing for potential cuts in interest rates to sustain recovery.