China to issue record treasury bonds in 2022

China plans to sell a record amount of treasury bonds in 2022, while keeping overall interest rates of the issuance lower, as Beijing adopts a proactive policy to stabilize economic growth, a senior official at the finance ministry said.

China will provide liquidity support for treasury bond issuance, and will also attract more long-term foreign investors into the world's second-biggest bond market, Wang Xiaolong, director of the Treasury Department, Ministry of Finance, said during a meeting.

"Expansion and contraction of treasury bond issuance reflects the direction of macro policies," Wang said in the speech, which was reported on Wednesday in China Bond, a magazine published by the China Central Depository & Clearing Co., Ltd. CCDC).

China, which issued nearly 7 trillion yuan ($1.10 trillion) of treasury bonds in 2021, faces multiple challenges, including the pandemic, global inflationary pressure, and uncertainty stemming from the US Federal Reserve's tapering, Wang said.

China's treasury bond issuance will hit a record high next year, as quite a large volume of bonds will mature, and the government continues to pursue a proactive fiscal policy.

The Ministry of Finance will coordinate with relevant government bodies to ensure there is ample market liquidity to guarantee smooth issuance, Wang said.

And as interest payment burdens from maturing bonds grow next year, China will moderately increase the proportion of short-term treasury bonds in its issuance in 2022 to guide the overall rates lower, he added.

In addition, China will reform the management of maturity dates for treasury bonds, so as to stabilize market expectations and help institutions better manage liquidity.