China Considers 1 Trillion Yuan of Ultra-Long Sovereign Bonds to Shore Up Economy

China is considering an issuance of 1 trillion yuan of new debt under a special sovereign bond plan to finance the efforts to boost its lackluster economy. If approved, it will be the fourth such sale in the past 26 years in history.

The plan is under intense discussion by high level policymakers. It would involve an issuance of ultra-long sovereign bonds to fund measures that support food, energy, supply chains and urbanization sectors.

The latest issuance of this level was in 2020 when the government was in need to fund for expenses caused by the Covid-19 pandemic.

The source familiar with the matter stated that policymakers are in discussion and the plan could be changed.

This move could surprise the market, especially if it is used to finance the property sector and inject liquidity to its economy.


Earlier this week, the head of the International Monetary Fund (IMF) warned China that it needs structural reforms to continue to open up its economy in order to avoid a fairly significant decline in growth rates, while the dept-piling property sector still needed fixing.

China will announced its 4Q23 and 2023 economic growth tomorrow. IMF in November raised its forecast for China’s growth in 2023 to 5.4% after several moves by the government that aimed to shore up the economy. In the meantime, the market expected around 5% for the world’s second largest economy.