BEIJING, June 12 (Xinhua) -- China's new policies on local government special bond issuance will help boost infrastructure investment and support economic growth, a Goldman Sachs report said.
China issued a document Monday which encourages local governments and financial institutions to use special bonds and other market-based financing methods to support key areas and major projects.
The move demonstrates the government's efforts to counter downside risks by mitigating any financing bottleneck for infrastructure investment in the coming months, said Goldman Sachs analyst Li Zhennan.
Li Chao, an analyst with Huatai Securities, said the government does not intend to massively stimulate infrastructure investment, but to improve the weak links in infrastructure.
As the special bonds would only apply to specified areas or projects, the move represents a policy fine-tuning, but not the country's reverting to an old path of resorting to massive stimulus, Li said.
To cope with external headwinds, the government will maintain its focus on stabilizing the general demand by pushing forward the supply-side structure reform, he said.
The country set its annual quota of local government bond issuance for 2019 at 3.08 trillion yuan (about 446.38 billion U.S. dollars). A total of 1.4596 trillion yuan has been issued in the first five months of the year, of which 859.8 billion yuan was special local government bonds.
Most of the new local government bonds were used to finance projects under construction including railways, water conservancy works and agriculture infrastructure, according to a statement from the Ministry of Finance, the People's Bank of China and four other government agencies.