China Completes 1.3 Trillion Yuan Bond Programme to Fund Projects and Consumer Trade-Ins

Final sale closes a six month funding programme

China completed its 2026 programme of ultra-long special treasury bond sales on October 16, raising 1.3 trillion yuan to finance major infrastructure, equipment upgrades and consumer trade-in subsidies. The Ministry of Finance issued the final 20 billion yuan that morning, ending a borrowing programme that began on April 24.

The largest allocation, 800 billion yuan, supports 1,417 major projects, including scientific innovation, water works, underground pipelines and transport infrastructure. Another 250 billion yuan supports consumer trade-ins, while 200 billion yuan finances equipment upgrades across 22 sectors. The remaining 50 billion yuan is earmarked for a special fund combining government financial support with financial sector measures to stimulate domestic demand.

The completion comes as China seeks to turn public borrowing into construction activity, machinery purchases and household spending during the final quarter of the year. The government has distributed the full annual allocations for major projects, equipment upgrades and consumer trade-ins. Construction schedules, purchases and payments will determine how quickly that money reaches businesses and households.

China has now issued these bonds for three consecutive years: 1 trillion yuan in 2024, followed by 1.3 trillion yuan in both 2025 and 2026. This year's amount is 30 percent above the 2024 level, bringing the total over the three years to 3.6 trillion yuan.

The annual borrowing total held steady in 2026. Its allocation shows how the government is combining spending on assets intended to last for decades with subsidies intended to encourage purchases now.

Where the 1.3 trillion yuan is going

Major national strategies and security capacity projects receive about 61.5 percent of the annual total. Consumer trade-ins account for about 19.2 percent, equipment upgrades for 15.4 percent, and the fiscal and financial coordination fund for 3.8 percent. The four allocations add up to the full 1.3 trillion yuan.

The government's term for major national strategies and security capacity covers a broad range of investments. In this programme, it includes projects supporting technology, food production, transport, water management and public infrastructure.

• 800 billion yuan for major national strategies and security capacity, supporting 1,417 projects.
• 250 billion yuan for consumer goods trade-ins, distributed to local governments.
• 200 billion yuan for equipment upgrades, supporting around 11,000 projects across 22 sectors.
• 50 billion yuan for a special fiscal and financial coordination fund to boost domestic demand.

China is using two different channels to encourage economic activity. Public projects and equipment upgrades create demand for construction, machinery and related services. Trade-in subsidies reduce the cost to households of replacing eligible vehicles, appliances and digital products.

How the bond sales unfolded

The Ministry of Finance opened the programme on April 24 with 34 billion yuan of bonds maturing in 20 years and 85 billion yuan maturing in 30 years. Together, those first sales raised 119 billion yuan.

The annual schedule comprised 23 issues across maturities of 20, 30 and 50 years. The first sale of the 50 year bonds was scheduled for May 6, earlier than the corresponding May 23 date in 2025. The final October 16 sale reopened an existing bond maturing in 20 years, with a fixed interest rate and periodic interest payments.

• April 20: The National Development and Reform Commission announced a second allocation for major projects.
• April 24: Treasury bond issuance began with sales totalling 119 billion yuan.
• July 3: The commission announced that all 200 billion yuan for equipment upgrades had been disbursed.
• September 30: The commission announced the final 62.5 billion yuan allocation for consumer trade-ins.
• October 16: The final 20 billion yuan bond sale completed the annual programme.

Sales raised 572 billion yuan in the second quarter, 605 billion yuan in the third and 123 billion yuan in the fourth. The second and third quarters together accounted for about 90.5 percent of annual issuance, concentrating most borrowing before the final months of the year.

What borrowing for decades means

Ultra-long special treasury bonds are central government debt issued for designated policy purposes. Investors provide money now, receive interest during the life of the bond and are owed repayment when it matures. The 2026 programme used maturities extending from 20 to 50 years.

Long maturities give the government more time before it must repay the principal. That can suit infrastructure such as water systems and transport links, whose construction and use extend over many years. Interest payments still create a continuing budget obligation.

Zhang Yi, chief economist at Financial Street Securities, said the large supply of long bonds could temporarily push up yields on bonds maturing in 30 and 50 years. A yield is the return investors earn at the price they pay. Insurance companies and pension funds, which need assets to match obligations far into the future, were among the sources of demand he identified as limiting upward pressure on yields.

Luo Zhiheng, chief economist at Yuekai Securities, said central government financing could support infrastructure, equipment replacement and consumption while giving local government budgets more room. The borrower for this programme is the central government, while many of the funded activities take place locally.

Major projects take the largest share

The 800 billion yuan allocation supports scientific and technological innovation, ecological protection and restoration in the Yangtze River Basin, major transport infrastructure along the Yangtze, urban underground networks and major water conservancy projects. It also covers the New Western Land-Sea Corridor and improvements to higher education.

The National Development and Reform Commission's April 20 announcement described a second batch of 216.8 billion yuan for 336 projects. Those projects included artificial intelligence, farmland improvements, underground pipeline renovation, transport in the Yangtze River Economic Belt and higher education.

The commission put the first batch at 389.7 billion yuan, taking the combined allocation to 606.5 billion yuan, or about 76 percent of the annual 800 billion yuan budget. An April 24 account of the first two project lists instead put their funding requirement at 386.8 billion yuan; the reason for the difference was not explained.

By the programme's completion, the annual allocation supported 1,417 major projects. The range matters for local communities: underground pipes serve cities, water projects support water management, and transport investments connect production centres with markets.

The commission also called for better investment and financing arrangements, stronger supervision of central funds and improvements to the rules and management practices accompanying construction. Those administrative changes are sometimes described as soft infrastructure.

Equipment funding reaches 22 sectors

The National Development and Reform Commission announced on July 3 that the full 200 billion yuan equipment upgrade allocation had been disbursed in three batches. Its equipment funding announcement, updated July 4, said the money supported around 11,000 projects across 22 sectors.

The third batch covered energy and power, logistics, education, elderly care facilities, retail and commercial facilities, and elevator installation in older residential communities. The programme therefore reaches beyond factory machinery into services and facilities used in daily life.

For residents of older buildings, an elevator installation can change access to their homes. For schools, care facilities and logistics operators, new equipment can change how services are delivered. The types of projects listed show the breadth of spending, although individual project completion dates were not given.

The commission's data showed investment in equipment and machinery purchases rising 9.3 percent from a year earlier in the first five months of 2026. Such purchases represented 17.5 percent of total investment, up 2.2 percentage points from 15.3 percent a year earlier.

Equipment purchases were therefore taking a larger share of investment as well as growing in value. The commission said it would work with other departments to track funding through allocation and implementation, with the aim of improving the use of central money.

Trade-ins support purchases across China

The final consumer trade-in allocation, announced on September 30, provided 62.5 billion yuan to local governments. That completed distribution of the annual 250 billion yuan budget. The fourth batch alone represented one quarter of the year's allocation.

From January through August, sales of goods covered by the programme reached 1.55 trillion yuan. Purchases included 5.35 million vehicles, 91.46 million home appliances and 108 million digital and smart products.

The finance ministry described the programme as benefiting 208 million people, while another official data summary counted 208 million transactions. A transaction count measures purchases, while a people count measures participants, who may make more than one purchase.

Trade-in support works by helping eligible buyers replace older goods with new ones. For households, the immediate benefit is a lower purchase cost. Retailers and manufacturers receive demand for the replacement products, connecting the consumer subsidy with production and distribution.

The 1.55 trillion yuan sales figure describes the value of goods purchased under the programme. The public subsidy covers part of an eligible purchase, with buyers paying the balance. The annual subsidy budget and the sales total also cover different periods: the former is for all of 2026, while the latter runs through August.

The focus shifts to spending and construction

Finance Minister Lan Fo'an has called for targeted additional policies and coordinated use of ultra-long special treasury bonds and local government special bonds. His priorities include major national projects and infrastructure networks during the opening year of China's 15th Five-Year Plan.

The Ministry of Finance's report on fiscal policy implementation in the first half of 2026 also called for coordinated use of bond proceeds and central budget investment. It directed attention toward advanced production, urban development and projects intended to improve productivity, meaning the amount of output produced from resources such as labour and capital.

Song Xiangqing, vice president of the China Society of Commercial Economics, said faster construction could generate orders and employment across infrastructure supply chains. He also expected the full distribution of trade-in funds to continue supporting purchases of appliances, digital products and vehicles in the fourth quarter.

Yuan Haixia, head of the research institute at China Chengxin International, expected several funding channels, including special bonds and policy financial instruments, to support faster infrastructure activity during the quarter. These were expectations about the spending still to come.

The next practical milestones are project starts, construction progress, equipment deliveries and subsidy payments. The announcements set out the funding allocations but gave no single completion date for the projects they finance.

Other borrowing programmes continue

About 1.45 trillion yuan of local government bond sales remained pending when the ultra-long treasury programme finished, according to official data. Local borrowing therefore remains part of the financing calendar after the central government's final sale under this programme.

A separate 2026 plan proposed issuing 300 billion yuan of special treasury bonds to replenish capital at large state commercial banks. That programme uses maturities of five and seven years, with auctions scheduled for May 22 and June 12, respectively.

The proposed bank capital amount was below the 500 billion yuan provided in 2025. Industrial and Commercial Bank of China and Agricultural Bank of China were considered possible recipients after four other large state banks received capital the previous year; the recipient assessment was a market expectation.

China International Capital Corporation estimated that 300 billion yuan of additional bank capital could support about 4 trillion yuan of asset expansion and raise the two banks' average core capital ratio by 0.6 percentage points. Bank capital provides a financial cushion and supports lending capacity. The estimate illustrates another route through which public borrowing could support economic activity, alongside direct project spending and household subsidies.

Key Points

• China completed 1.3 trillion yuan of ultra-long special treasury bond issuance on October 16, following a final sale of 20 billion yuan.
• Major national projects receive 800 billion yuan, consumer trade-ins 250 billion yuan, equipment upgrades 200 billion yuan and a fiscal and financial coordination fund 50 billion yuan.
• The major project allocation supports 1,417 projects. Equipment funding supports around 11,000 projects across 22 sectors.
• All annual equipment upgrade and consumer trade-in allocations have been distributed.
• Trade-in purchases reached 1.55 trillion yuan from January through August, including vehicles, appliances and digital products.
• The focus now shifts to construction, equipment deliveries and consumer purchases, while about 1.45 trillion yuan of local government bond sales remained pending.