Special bonds early usage to spur economy

Move to meet needs of key construction projects, ensure sufficient funds ready

China will allocate in advance part of special bonds designated for next year and ensure that funds raised from these bonds are readily available at the start of next year in an effort to spur quality investment and expand domestic demand.

The decision was made on Wednesday at the State Council's executive meeting chaired by Premier Li Keqiang.

It was pointed out at the meeting that China's economy maintained overall stable momentum and achieved steady progress in the first half. It was urged at the meeting that effective investment must be expanded. All special local government bonds in this year's quota must be issued by the end of September and distributed to projects by the end of October.

Measures to reduce real interest rates will be implemented at a faster pace. Policy tools like general and targeted cuts in reserve ratio requirements will be employed as appropriate to enhance the ability of financial institutions to serve the real economy.

"We have adopted a multipronged approach to tackling downward economic pressure, including cutting taxes and fees and transforming government functions. The goal is to energize market players and ensure the economy performs within a proper range," Li said.

"China is still a developing country, and much remains to be desired in infrastructure and other fields. This development stage determines that we must have stable effective investment," Li said.

It was decided at the meeting that to meet needs of key construction projects, some special local government bonds out of next year's quota will be allocated in advance to ensure that the funds are available for use at the beginning of next year.

Funds raised from the special bonds shall not be used in areas related to real estate, for debt swaps or for industrial projects that can be entirely commercially developed.

"Our measures must be well-targeted. Solid activities in the real economy are needed before the end of the year," Li said, "The scenario in which 'funds chase after projects' must be avoided."

Greater efforts were urged in project management. The special bonds will first go to well-prepared projects that have completed approval procedures.

The premier also signed an administrative order on Wednesday appointing Ho Iat-seng as chief executive of the Macao Special Administrative Region.

The appointment was made in a plenary meeting of the State Council, which endorsed the result of an election in which Ho garnered 392 votes from a 400-member election committee on Aug 25.

Xu Wei contributed to this story.