China has issued 1.46 trillion yuan ($229.30 billion) in the 2022 advance quota for local government special bonds to help spur investment and support the economy, vice finance minister Xu Hongcai said on Thursday. China aims to issue the special bonds in the first quarter of 2022, prioritising investment projects and regions with lower debt burdens, Xu told a briefing. Authorities will "reasonably grasp the rhythm of special bond issuance, and give better play to the positive role of special bonds in stabilising investment and growth," Xu said. Analysts at Citi expect China to set a 2022 quota of 3.8 trillion yuan on special local government bonds to fund infrastructure projects, up from 3.65 trillion yuan this year. China"s economy, which is losing steam after a solid recovery from the pandemic last year, faces multiple challenges as a property downturn and strict COVID-19 curbs have hit consumer spending. The country"s factory output grew faster than expected in November, supported by stronger energy production and a moderation in the cost of materials, but new curbs to fight rising COVID-19 cases hit retailers. read more China"s local governments have issued 3.42 trillion yuan in special bonds, under the 2021 quota, as of Dec. 15, Xu said. China will strictly control local governments’ hidden debt to fend off systemic risks, Xu said, saying it had launched pilot schemes in Shanghai and Guangdong to eliminate hidden local debt. Total government debt was at 45.8% of GDP in 2020, Xu said, adding that the country"s debt risks are under control. ($1 = 6.3671 Chinese yuan renminbi) Reporting by Kevin Yao; editing by Barbara Lewis Our Standards: The Thomson Reuters Trust Principles.
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