China Increases Bond Issuance to Help Its Economy
Move to fund infrastructure projects comes alongside unusual increase of budget-deficit target
3 min
China ramped up efforts to stimulate its beleaguered economy, issuing additional sovereign bonds and raising its budget-deficit target, the first time it revised its budget outside the regular legislative session in more than a decade.
The country’s top legislative body approved on Tuesday a plan to raise 1 trillion yuan, equivalent to around $137 billion, in additional sovereign debt, half for use before the end of this year and half for next year, according to the official Xinhua News Agency. Policy makers said the bond issuance was intended for infrastructure projects in the wake of severe flooding and other natural disasters, Xinhua reported.
The latest stimulus, which follows a flurry of piecemeal measures such as interest-rate cuts and the lowering of mortgage costs for home buyers, signals that Beijing continues to worry about the weakness of the economic rebound it had counted on after doing away with all pandemic restrictions.
Part of the problem is a mounting debt burden for local governments in more areas of the country and a real-estate crisis that shows little sign of abating. Beijing has so far avoided offering support to households to help the economy transition into one more driven by consumption, in large part because of leader Xi Jinping’s focus on ideology and reluctance to resort to handouts to consumers.
While many economists puzzled over the timing of the announcement as growth in recent weeks has appeared to stabilize, they viewed the new debt issuance as incremental in nature and said it wouldn’t be enough to reverse longstanding headwinds for the economy such as a lack of demand from businesses and consumers.
The 1 trillion yuan of sovereign bonds make up less than 1% of China’s gross domestic product. By comparison, the stimulus China launched in the 2008 global financial crisis accounted for more than 12% of its GDP at the time.
“It’s certainly not a game changer,” said Larry Hu, chief China economist at Macquarie Group. “But it confirms that the overall policy stance stays supportive given the recovery is still fragile.”
Some economists say the stimulus bill sent an unusual signal that the central government is willing to shoulder responsibility in funding infrastructure projects, after leaving the task to local governments for much of the past few decades.
The Wall Street Journal reported in June that policy makers weighed issuing around 1 trillion yuan in special treasury bonds to help indebted local governments and prop up business confidence. The policy proposal didn’t get approved at the time by Xi, who has centralized decision-making. In the top leader’s view, austerity is preferred over stimulus, according to people close to Beijing’s policy-making process.
But the heavy flooding this summer displaced millions of people and further strained finances in northeast China, especially the province of Hebei that neighbors Beijing. Public anger flared up following the losses caused by the flood.
The decision to help the disaster-struck regions was made at a high-level meeting presided over by Xi in August, according to Tuesday’s Xinhua article.
Much of the new debt raised will be used to help with reconstruction after recent flooding, improve urban drainage and help fend off other natural disasters, according to the plan that was approved by the standing committee of the National People’s Congress this week, Xinhua said.
As a result, China’s official fiscal deficit, which doesn’t count special bonds issued by local governments, will rise to 3.8% of GDP, up from the 3% ceiling set by the government in March.
While the fresh stimulus should help China maintain 10% growth in infrastructure investments for the remainder of the year, according to Hu from Macquarie Group, it falls short of the type of stimulus that economists say China desperately needs: direct or indirect transfer of wealth to households to boost consumption.
Chinese officials last week reported a stronger-than-expected 4.9% on-year growth in the third quarter, a result that will likely ensure China will hit around 5% growth this year as desired, dimming the prospect for Beijing to unleash more relief measures urgently, economists said.
China last changed its budget outside the legislative session in 2008, when officials said they planned to spend 1 trillion yuan in funds raised through local government funding, bank loans, donations from residents and other channels to rebuild areas devastated by the Sichuan earthquake. Later that year, Beijing announced a stimulus package it billed as totaling $586 billion to bolster domestic demand and help avert a global recession.
“It is rare for the central government’s fiscal plans to be revised outside the usual budget cycle, so this move signals clear concern about near-term growth,” economists from Capital Economics said in a note to clients.
The funding gap for local officials has been exacerbated by the bursting property bubble, since local governments long have counted on land sales as a source of revenue, said Wei Yao, chief Asia economist at Société Générale.
“At minimum, Beijing recognized that local governments face structural fiscal constraints,” she said. “That’s a pretty big deal.”
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The lunar flyby would be the deepest humans have traveled in space in decades.
4 min
It’s go time for the highest-stakes mission at NASA in more than 50 years.
On April 1, the agency is set to launch four astronauts around the moon, the deepest human spaceflight since the final Apollo lunar landing in 1972.
The launch window for Artemis II , as the mission is called, opens at 6:24 p.m. ET.
National Aeronautics and Space Administration teams have been preparing the vehicles to depart from Florida’s Kennedy Space Center on the planned roughly 10-day trip. Crew members have trained for years for this moment.
Reid Wiseman, the NASA astronaut serving as mission commander, said he doesn’t fear taking the voyage. A widower, he does worry at times about what he is putting his daughters through.
“I could have a very comfortable life for them,” Wiseman said in an interview last September.
“But I’m also a human, and I see the spirit in their eyes that is burning in my soul too. And so we’ve just got to never stop going.”
Wiseman’s crewmates on Artemis II are NASA’s Victor Glover and Christina Koch, as well as Canadian Space Agency astronaut Jeremy Hansen.
What are the goals for Artemis II?
The biggest one: Safely fly the crew on vehicles that have never carried astronauts before.
The towering Space Launch System rocket has the job of lofting a vehicle called Orion into space and on its way to the moon.
Orion is designed to carry the crew around the moon and back. Myriad systems on the ship—life support, communications, navigation—will be tested with the astronauts on board.
SLS and Orion don’t have much flight experience. The vehicles last flew in 2022, when the agency completed its uncrewed Artemis I mission .
How is the mission expected to unfold?
Artemis II will begin when SLS takes off from a launchpad in Florida with Orion stacked on top of it.
The so-called upper stage of SLS will later separate from the main part of the rocket with Orion attached, and use its engine to set up the latter vehicle for a push to the moon.
After Orion separates from the upper stage, it will conduct what is called a translunar injection—the engine firing that commits Orion to soaring out to the moon. It will fly to the moon over the course of a few days and travel around its far side.
Orion will face a tough return home after speeding through space. As it hits Earth’s atmosphere, Orion will be flying at 25,000 miles an hour and face temperatures of 5,000 degrees as it slows down. The capsule is designed to land under parachutes in the Pacific Ocean, not far from San Diego.
Is it possible Artemis II will be delayed?
Yes.
For safety reasons, the agency won’t launch if certain tough weather conditions roll through the Cape Canaveral, Fla., area. Delays caused by technical problems are possible, too. NASA has other dates identified for the mission if it doesn’t begin April 1.
Who are the astronauts flying on Artemis II?
The crew will be led by Wiseman, a retired Navy pilot who completed military deployments before joining NASA’s astronaut corps. He traveled to the International Space Station in 2014.
Two other astronauts will represent NASA during the mission: Glover, an experienced Navy pilot, and Koch, who began her career as an electrical engineer for the agency and once spent a year at a research station in the South Pole. Both have traveled to the space station before.
Hansen is a military pilot who joined Canada’s astronaut corps in 2009. He will be making his first trip to space.
Koch’s participation in Artemis II will mark the first time a woman has flown beyond orbits near Earth. Glover and Hansen will be the first African-American and non-American astronauts, respectively, to do the same.
What will the astronauts do during the flight?
The astronauts will evaluate how Orion flies, practice emergency procedures and capture images of the far side of the moon for scientific and exploration purposes (they may become the first humans to see parts of the far side of the lunar surface). Health-tracking projects of the astronauts are designed to inform future missions.
Those efforts will play out in Orion’s crew module, which has about two minivans worth of living area.
On board, the astronauts will spend about 30 minutes a day exercising, using a device that allows them to do dead lifts, rowing and more. Sleep will come in eight-hour stretches in hammocks.
There is a custom-made warmer for meals, with beef brisket and veggie quiche on the menu.
Each astronaut is permitted two flavored beverages a day, including coffee. The crew will hold one hourlong shared meal each day.
The Universal Waste Management System—that’s the toilet—uses air flow to pull fluid and solid waste away into containers.
What happens after Artemis II?
Assuming it goes well, NASA will march on to Artemis III, scheduled for next year. During that operation, NASA plans to launch Orion with crew members on board and have the ship practice docking with lunar-lander vehicles that Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin have been developing. The rendezvous operations will occur relatively close to Earth.
NASA hopes that its contractors and the agency itself are ready to attempt one or more lunar landing missions in 2028. Many current and former spaceflight officials are skeptical that timeline is feasible.
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