Launch of Local Government Bonds in China

19 Pages Posted: 25 Nov 2009

See all articles by Eiichi Sekine

Eiichi Sekine

Nomura Institute of Capital Markets Research

Date Written: November 19, 2009

Abstract

In November 2008, China announced a RMB4trn package of economic stimulus measures that also dealt with how it would be funded. As a result, in March 2009, the National People's Congress (China's parliament), with the approval of the central government, authorized the Ministry of Finance to issue RMB200bn of local government bonds on behalf of all China's local governments. Under China's 1994 Budget Law, local governments are not normally allowed to issue bonds. The measure, although it only applies for one fiscal year, is therefore ground-breaking. We will continue to monitor related developments such as the issue of who will be responsible for redeeming the bonds and the issue of how transfer payments will be managed to enable China to reduce regional inequalities.

Keywords: China, local government bonds, bonds

JEL Classification: G18, H53, H54, H61, H63, H72, H74, H77, R51

Suggested Citation

Sekine, Eiichi, Launch of Local Government Bonds in China (November 19, 2009). Nomura Journal of Capital Markets, Vol. 1, No. 3, 2009, Available at SSRN: https://ssrn.com/abstract=1512384

Eiichi Sekine (Contact Author)

Nomura Institute of Capital Markets Research ( email )

Urbannet Otemachi Building
2-2-2, Otemachi, Chiyoda-ku
Tokyo, 100-8130
Japan

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
130
Abstract Views
807
Rank
395,045
PlumX Metrics