China Plans to Increase Consumption Stimulus in 2025 Through $411 billion Bonds Issuance

 

Beijing consented to issue special treasury bonds valued at $411 billion in 2025, the largest-ever special treasury issue, to help revitalize its sluggish economy, sources cited.

 

The proceeds will be used to stimulate consumption through measures such as subsidy programs, corporate equipment upgrades, and investments in advanced industries, the sources added.

 

Separately, Beijing plans to raise about $178 billion through long-term special government bonds in 2025 to finance “two major” projects and “two new” projects, sources said. Two new programs are to subsidize consumer durables and large-scale equipment escalation for businesses. Two major projects are to carry out national strategies, such as building railroads, airports, farmland, and security capacity in key areas.

 

Another large portion of the funds raised by 2025's bonds will be used to invest in advanced manufacturing, such as electric vehicles, robotics, semiconductors, and green energy, the sources noted. The investment will amount to over $137 billion. The remaining proceeds will be used to refinance large state banks that struggle with diminishing margins, declining profits, and rising non-performing loans.

 

The planned debt in 2025 is also seen as Beijing easing the strike from an expected increase in US tariffs on Chinese imports.

 

In 2024, exports are positive to China's economy when domestic demand weakens. Once Trump imposes 60% tariffs on exports. China's economic development will have to rely on domestic demand: household consumption and investment.

 

At China's Central Economic Work Conference in December, Beijing pledged to increase budget deficits, issue more bonds, and loosen monetary policy to maintain steady growth and deal with impending trade tensions under Trump's administration.

 

Ways to realize promises will not be formally announced until the meeting next March. So, expectations are subject to change until then.

 

China's Ministry of Finance said on Tuesday that it will expand financial support for consumption in 2025 by increasing subsidies for residents' pensions and health insurance and enhancing consumer goods trade-ins.