China to issue record treasury bonds in 2022, policy rates fall

SHANGHAI, Dec. 30 (Reuters) – China plans to sell a record amount of Treasury bonds in 2022, while keeping the issue’s overall interest rates lower, as Beijing adopts a proactive policy to stabilize the economic growth, said a senior finance ministry official. .

China will provide liquidity support for the issuance of Treasury bonds and also attract more long-term foreign investors to the world’s second-largest bond market, said Wang Xiaolong, director of the Treasury Department of the Ministry of Finance, at the time. of a meeting.

“The expansion and contraction of Treasury bond issuance reflects the direction of macroeconomic policies,” Wang said in the speech, which was reported on Wednesday in China Bond, a magazine published by China Central Depository & Clearing Co. , Ltd. (CCDC).

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China, which issued nearly 7 trillion yuan ($ 1.1 trillion) in treasury bonds in 2021, faces multiple challenges, including the pandemic, global inflationary pressure and uncertainty resulting from the reduction of the US Federal Reserve, Wang said.

China’s Treasury bond issuance will hit an all-time high next year as a sizable volume of bonds mature and the government continues to pursue proactive fiscal policies.

The finance ministry will coordinate with relevant government agencies to ensure there is enough liquidity in the market to ensure a smooth issuance, Wang said.

And as interest charges on maturing bonds increase next year, China will moderately increase the proportion of short-term Treasury bonds in its issuance in 2022 to lower overall rates, he said. added.

In addition, China will reform the management of T-bill maturities to stabilize market expectations and help institutions better manage liquidity.

The government hopes that Treasury bond yields will play a more important role as a benchmark for other types of borrowing.

Wang said China will encourage and guide more medium- and long-term foreign capital into the Chinese bond market and hold Chinese debt longer.

Foreign holdings of Chinese treasury bills have increased for 11 consecutive quarters and now stand at 2.4 trillion yuan, or 11% of the market, according to Wang.

($ 1 = 6.3687 yuan Chinese renminbi)

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Report from the Shanghai press room; Editing by Sam Holmes, Shri Navaratnam and Raju Gopalakrishnan

Our Standards: Thomson Reuters Trust Principles.

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