On December 10, according to public information released by the Ministry of Finance, the ministry will issue two tranches of special treasury bonds totaling RMB 750 billion on December 12, with the proceeds earmarked for repaying outstanding debts. The issuance process will not involve social investors; individual investors are not eligible to participate in the purchase, and the move will not expand the fiscal deficit.
Since the start of the 21st century, China has maintained a consistent current account surplus, accompanied by a steady rise in foreign exchange reserves. Against the backdrop of the mandatory foreign exchange settlement and sales system, domestic markets grappled with issues such as excess liquidity, asset price bubbles, and rising consumer prices. To enhance the investment returns on foreign exchange assets and moderately offset the overly rapid growth of liquidity, the Ministry of Finance issued RMB 1.55 trillion worth of special treasury bonds in tranches in 2007 (with maturities of 10 and 15 years). The funds raised were used to purchase foreign exchange reserves from the central bank and equity stakes in Central Huijin Investment Ltd., leading to the establishment of China Investment Corporation.
The aforementioned RMB 1.55 trillion special treasury bonds have been maturing sequentially since 2017, requiring principal repayment. In response, the Ministry of Finance has adopted a debt roll-over approach—issuing new special treasury bonds of equivalent value to repay maturing debts. This is a regular targeted reissuance operation, exerting minimal impact on market liquidity and the broader economy.
Specifically, to repay the principal of the RMB 750 billion special treasury bonds issued in 2007 and maturing in 2022, the Ministry of Finance issued a new batch of 3-year special treasury bonds worth RMB 750 billion on December 12, 2022. Three years later, as the principal of these RMB 750 billion bonds falls due on December 12, 2025, the ministry must issue another round of special treasury bonds of the same amount to cover the repayment.
In accordance with the Notice on Matters Concerning the Issuance of 2025 Maturing Rollover Special Treasury Bonds (Tranche 1 and Tranche 2) issued by the Ministry of Finance, the two tranches of maturing roll-over special treasury bonds to be launched on December 12 will include RMB 400 billion in 10-year bonds and RMB 350 billion in 15-year bonds, raising a combined total of RMB 750 billion.
When commenting on the background of this issuance, a relevant official from the Ministry of Finance stated that for the RMB 750 billion special treasury bonds maturing on December 12, 2025, the ministry will follow the practice of previous years and continue the roll-over issuance by offering the 2025 maturing roll-over special treasury bonds of equivalent value to designated banks. The funds raised will be used to repay the principal maturing in the same month.
Notably, unlike the previous 3-year tenor, the bonds issued this time have extended maturities of 10 and 15 years.
The official further explained that the RMB 750 billion 2025 maturing roll-over special treasury bonds will be issued through private placement to designated banks in the national interbank bond market, consisting of RMB 400 billion in 10-year bonds and RMB 350 billion in 15-year bonds. The issuance will exclude social investors, meaning individual investors are not permitted to participate in the purchase. As an equivalent roll-over of the original special treasury bonds, the 2025 maturing roll-over special treasury bonds will still match the corresponding original assets and liabilities, and will not add to the fiscal deficit.
Data released by the Ministry of Finance shows that in the first 10 months of this year, the central government’s general public budget revenue reached RMB 8.1856 trillion, down 0.8% year-on-year. Meanwhile, the central government’s general public budget expenditure stood at RMB 3.4727 trillion, representing a year-on-year increase of 6.3%.
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