What's happened
Beijing announced a 69 billion yuan ($9.5 billion) issuance of ultra-long treasury bonds to fund a trade-in program aimed at stimulating household spending. The move follows recent data showing a slowdown in consumption growth amid stagnant incomes and job insecurity, with authorities also extending interest subsidies and focusing on service sector growth.
What's behind the headline?
Strategic Stimulus Focuses on Consumption
China's decision to issue 69 billion yuan in ultra-long treasury bonds reflects a targeted approach to revive household spending. The trade-in program, which has already driven significant sales, indicates that consumer incentives remain central to economic recovery plans.
Underlying Economic Challenges
Despite these measures, stagnant incomes and job insecurity continue to suppress consumption growth. The decline in the contribution of consumption to GDP—from 61.4% to 52% in the first half of 2025—signals persistent structural issues.
Policy Mix and Future Outlook
The extension of interest subsidies and emphasis on service sector growth suggest a shift towards more sustainable, long-term demand drivers. Authorities aim to stabilize employment, improve infrastructure, and promote leisure and healthcare services, which could gradually offset consumption stagnation.
Risks and Implications
While these measures may support short-term growth, the widening fiscal deficit and ongoing economic headwinds pose risks. The effectiveness of bond issuance as a stimulus depends on whether consumer confidence and income levels improve, which remains uncertain. The focus on service sectors indicates a strategic pivot that could reshape China's economic landscape over the coming years.
What the papers say
The South China Morning Post reports that China will allocate 69 billion yuan in ultra-long treasury bonds to fund a trade-in program, which has already generated over 1.7 trillion yuan in sales this year. The Bloomberg articles highlight recent trade data showing a 10.8% narrowing of goods trade shortfall and the government's increased expenditure on social programs, including nationwide child cash handouts. However, Bloomberg also notes the widening fiscal gap, which reached 5.25 trillion yuan in the first half of 2025. These contrasting reports underscore China's balancing act between stimulating growth and managing fiscal health, with the recent bond issuance being a key part of this strategy.
How we got here
China's government has been actively trying to boost domestic consumption amid economic slowdown. The trade-in program, which has generated over 1.7 trillion yuan in sales this year, is part of broader efforts including job creation, infrastructure investment, and social spending. Recent data shows a slowdown in retail growth and a widening fiscal deficit, prompting policy adjustments.
Go deeper
Common question
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Why is China issuing ultra-long treasury bonds now?
China's recent move to issue ultra-long treasury bonds has sparked curiosity among investors and analysts alike. This strategy aims to boost domestic consumption and support economic growth amid ongoing challenges. But what does this mean for China's economy and global markets? Below, we explore the reasons behind this move and what it could signal for the future.
More on these topics
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China, officially the People's Republic of China, is a country in East Asia. It is the world's most populous country, with a population of around 1.4 billion in 2019.