Amid growing economic pressure and trade tensions with the US, the Chinese authorities launched a large-scale issuance of special sovereign bonds, which are not accounted for in the official fiscal deficit target level of 4% of GDP, allowing for expanded borrowing without changing regulations. Today, the first tranche was issued amounting to 286 billion CNY (≈ $39.2 billion at the exchange rate of 7.2917 CNY/$ on April 24, 2025):
165 billion CNY of five-year papers are aimed at recapitalizing state banks, where net profit over the past six months has decreased by 12% compared to the same period last year;
50 billion CNY — twenty-year bonds;
71 billion CNY — thirty-year bonds.
Moreover, Bloomberg sources note that the coupon rates on them will be 10–15 basis points higher than those of traditional issues from the People's Bank of China. The overall program provides for the placement of issues worth 500 billion CNY by June 4 and ultra-long papers worth 1.3 trillion CNY by October, demonstrating Beijing's systematic approach to protecting the country's economic interests amid the threat of an increase in American tariffs to 145%. At the same time, rating agencies Moody's and S&P warn of an increase in 'off-balance' debt and the potential for hidden liabilities growth, while data from the first days of trading shows that demand for the first tranche exceeded the supply volume by 1.8 times, indicating investor confidence but also their expectation for more transparent reporting from the Ministry of Finance.
Such a mechanism allows China to respond promptly to external shocks; however, in the long term, the sustainability of the program will depend on the economy's ability to generate sufficient growth and tax revenues to service the 'off-balance' debt.