(ATF) China has said local government should press on with issuing the rest of the special-purpose bonds earmarked for coronavirus relief projects – but officials warned against misusing the proceeds.
About 1.5 trillion yuan of 3.75 trillion of the debt special has been issued and the Ministry of Finance said local authorities needed to get a move on to finish the programme by October.
Special-purpose bonds were first introduced in 2018 to accelerate infrastructure projects. The money is only supposed to be used for projects that have already been given the go-ahead. However, billions of yuan have been diverted into private property schemes, helping to inflate a real estate bubble that threatens to weigh on the economy.
The MoF stressed that it would not tolerate the money raised being used on anything but Covid-19-linked projects. It produced a “negative list” of banned uses for the money. It includes spending the raised cash on recurring expenditure, unit operating expenses, payment of pensions, paycheques or interest payments.
Instead the circular said the funds should be used in areas including transport infrastructure, energy projects, agricultural and water conservancy, and environmental protection projects.
The maturity of the bonds should be decided in accordance with actual circumstances, according to a document that contained the MoF demands.