In the first quarter, local government bond issuance exceeded 3 trillion yuan, providing strong support for steady growth.

Reporter Han Yu

On March 31, 2026 Sichuan provincial government special-purpose bonds (Tranches 12 to 17) completed bidding and issuance. The total issuance size was 2.09B yuan, all of which were new bonds. The proceeds are planned to be used for areas such as infrastructure development, agriculture, forestry and water conservancy, and education. On the same day, the 2026 Sichuan provincial government general bonds (Tranche 2) also completed bidding and issuance, with a size of 20.9048 billion yuan. The proceeds are planned to be used for sectors including transportation infrastructure and social undertakings.

By this point, the issuance of local government bonds for the first quarter of this year has come to a successful close. Data from Wind shows that in the first quarter of this year, the total issuance scale of local government bonds across regions reached 3.11T yuan, up 9.3% year on year from the first quarter of 2025 (2.84T yuan). At the same time, the issuance of new special-purpose bonds in the first quarter of this year accelerated significantly, reaching 1.16T yuan, up 20.8% from the first quarter of 2025 (960.2B yuan).

Experts interviewed by Securities Daily said that the acceleration in the issuance of local government bonds in the first quarter—especially the faster issuance of new special-purpose bonds—reflects a more proactive fiscal policy front-loaded in its efforts, which will provide strong support for steady growth.

Judging from the capital allocation of new special-purpose bonds, in the first quarter of this year, a relatively large amount of funds flowed to directions such as municipal and industrial park infrastructure, transportation infrastructure, shantytown renovation, land reserves, and people’s livelihood services. Among them, the issuance scale of new special-purpose bonds for municipal and industrial park infrastructure reached 5,506 billion yuan, accounting for 47.5% of the overall total (182.1B yuan), the highest share. The issuance scales for transportation infrastructure, shantytown renovation, land reserves, and people’s livelihood services were 96.5B yuan, 965 billion yuan, 783 billion yuan, and 581 billion yuan respectively, with shares of 15.7%, 8.3%, 6.8%, and 5.0% respectively.

Yuan Shuai, deputy secretary-general of the Zhongguancun Internet of Things Industry Alliance, told Securities Daily that, judging from new special-purpose bonds, the issuance scale in the first quarter surged nearly 21% year on year. Moreover, a large amount of funds flowed to areas including municipal and industrial park infrastructure, transportation infrastructure, shantytown renovation, and people’s livelihood services—directly targeting key nodes in the current economic operation.

It is worth noting that, alongside the accelerated issuance of new special-purpose bonds, the issuance of refinancing special-purpose bonds for replacing existing stock of hidden debt (hereinafter referred to as “swap bonds”) also picked up. In the first quarter, the issuance scale of swap bonds across regions reached 78.3B yuan, accounting for nearly half of the planned issuance scale for this year (2 trillion yuan).

Song Xiangqing, deputy chairman of the China Society of Business Economics, told Securities Daily that the accelerated issuance of both new special-purpose bonds and swap bonds in the first quarter reflects a “balance” of steady growth and risk prevention. Specifically, the issuance of new special-purpose bonds quickly translates into physical workloads, driving infrastructure investment, while also providing funding assurance for major projects. The issuance of swap bonds is close to half of the full-year plan, which can effectively ease local government bond-debt risk, optimize the debt structure, and achieve multiple goals—stabilizing investment, addressing shortfalls, and defusing risks.

Yuan Shuai also said that the first-quarter issuance scale of swap bonds is close to half of the full-year plan, which sends a clear “risk-prevention” signal. By issuing low-cost refinancing bonds to swap out high-cost hidden debt, it can both effectively reduce local governments’ interest burden, optimize the debt maturity structure, and also mitigate potential default risks on debt—maintaining the stable and sound operation of local fiscal finances.

While completing first-quarter issuance, regions have also successively disclosed their second-quarter local government bond issuance plans. For example, Tianjin’s table of its second-quarter local government bond issuance plans shows that Tianjin plans to issue 114.30648 billion yuan of local government bonds in the second quarter, of which new special-purpose bonds are 58.1B yuan.

Wind data shows that, as of March 31, the total planned issuance size for second-quarter local government bonds disclosed by regions reached 20k yuan, including new special-purpose bonds of 17.01B yuan, accounting for 31.7%.

Song Xiangqing analyzed that with second-quarter planned issuance of local government bonds exceeding 2 trillion yuan and new special-purpose bonds accounting for nearly 32%, the overall picture is characterized by steady pacing, optimized structure, and continuing efforts. In terms of structure, the share of new special-purpose bonds is moderate: it continues to provide funding support for key areas such as infrastructure and people’s livelihood, while also leaving room for refinancing bonds. This arrangement balances both needs for project construction and for debt succession. It both consolidates the steady-growth results achieved in the first quarter and provides continuous funding support for the stable operation of the economy throughout the year.

(Editor: Wen Jing)

Keywords:

                                                            Local government bonds