On May 17, China's Ministry of Finance announced the first issuance of 40 billion yuan in 30-year ultra-long special government bonds, marking a significant step in the government bond market. This initiative aims to enhance the coordination of fiscal and monetary policy, providing more support for economic development.
Analysts pointed out that the issuance of ultra-long special government bonds will have some impact on liquidity, but it is expected that the short-term shock to the funding side will be relatively alleviated. The Ministry of Finance's issuance plan shows that this large-scale issuance will be spread over the coming months, helping to smoothly control funding supply pressure.
Meanwhile, the central bank ended a two-month liquidity reduction operation on May 15, signaling the coordination of monetary policy with the issuance of special government bonds. Experts believe that future monetary policy will adopt more measures to address the issuance of ultra-long special government bonds, including increased Medium-term Lending Facility (MLF) operations and open market operations to stabilize funding fluctuations.
In terms of fiscal policy, the Chinese government has recently intensified efforts to increase fiscal expenditures and accelerate the use of government bond funds to promote economic recovery and development. To coordinate with fiscal policy, the central bank has also taken several unexpected monetary policy measures, including reserve requirement ratio cuts and structural interest rate reductions, to ensure the coherence of macroeconomic policies.
The Chinese government emphasizes that the synergy between fiscal and monetary policy will produce a "1+1>2" effect. The State Council's mobilization meeting on the "dual engines" of construction proposed the comprehensive use of various policies to strengthen the coordination of fiscal and monetary financial instruments, providing more support for economic development.