ANZ: China May Approve 10 Trillion Yuan Bond Issuance for Debt Swap Program

Foreks - ANZ Research economists Raymond Yeung and Zhaopeng Xing stated that China could issue 10 trillion yuan in bonds for the debt swap program during the ongoing National People's Congress Standing Committee meeting. Analysts noted that the program could reduce the interest burden on local governments and improve their credit profiles. However, they mentioned that the economic impact of the debt swap program is likely to be "indirect and imperceptible," stating, "Authorities will push for a decentralized approach that encourages local governments to develop new revenue sources and for wealthier provinces to promote future growth." ANZ expects that direct economic stimulus through front-loaded bond issuance will only amount to 1 trillion yuan to help achieve China's growth target of 5%.