China is to issue 200 billion yuan (US$26.7 billion) of special
treasury bonds as the second tranche of a planned 1.55 trillion
yuan basket to finance the country's new foreign exchange
investment firm.
The bonds would be sold to the public, with outstanding terms of
more than 10 years, the Ministry of Finance announced on
Monday.
The first 100 billion yuan bonds will be issued later this month
in three batches, while sale of the second half is scheduled for
the fourth quarter.
The announcement came two weeks after the ministry issued 600
billion yuan of such bonds targeting the country's commercial banks
with an annual interest rate of 4.3 percent.
"The bond sale will help ease liquidity, prevent the economy
from overheating and strengthen the macro-control policy," the
ministry said.
"Theoretically, a 200-billion-yuan bond sale to the public could
have the same effect on excess liquidity as a 0.5-percentage-point
hike in bank reserve requirements," said Wang Guogang, a finance
expert at the Chinese Academy of Social Sciences.
Issuance in batches and to different buyers would ensure the
stability of the financial market and reduce the bond investment
risks, Wang said.
In June, China's top legislature approved the issuance of 1.55
trillion yuan of special treasury bonds by the Ministry of Finance
to buy US$200 billion forex reserve for a state investment firm,
which will make better use of the country's huge forex
reserves.
China's forex reserves had reached US$1.33 trillion by the end
of June.
(Xinhua News Agency September 11, 2007)
