1. What are special government bonds?
Unlike regular government debt, special bonds raise cash for a certain policy or to help solve a particular problem. They are not part of Chinas official budget and thus not included in deficit calculations. At more than 3.6% of gross domestic product, the 2020 deficit target is already higher than in recent years. A senior official said increasing debt levels to help the economy are feasible and necessary. The central government will cover interest payments and 30% of the principal.
2. How have they been used before?
During the Asian financial crisis, China sold 270 billion yuan of special government bonds — at the time the countrys largest bond issue — to raise capital for its big state…