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China Issues $100 Billion ‘Capital Budget’ Bonds for Industry and Infrastructure

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EIRNS—China’s economic growth has slowed down in this year’s strict COVID lockdowns, and now with some relaxation of that policy, it announced for Dec. 12 a special bond issue of 750 billion yuan ($108 billion equivalent) “assigned to all industries, including infrastructure, that could stimulate economic growth,” reported Global Times Dec. 11.

China has issued these special “capital budget” bonds on three previous occasions: 1998 in response to the so-called “Asia Crisis”; 2007 during the onset of the “Global Finance Crisis” out of the trans-Atlantic banking systems; and in 2020 during the COVID pandemic. In each case the special issues were for the purpose of increasing the capitalization and lending capabilities of the major state-owned development banks.

China is unique in its policy of regulating its economy not with interest rate changes or inflation targeting, but with state credit. In the past 35 years it has not entered a recession. [pbg]