New special bonds to fund infra flurry

China is stepping up its infrastructure efforts, which are boosted by the nation's bond issuance efforts, such as the release of new special bonds and launch of ultra-long-term special national bonds, experts said.

This move aims to provide ample financial backing for the country's infrastructure investments, ensuring a stable growth rate and sound macroeconomic operations, they added.

"The faster pace of bond issuances indicates increased funding demand for construction projects and offers strong support for economic stability. It helps maintain the positive growth momentum seen in the first quarter and ensures the continuity and stability of economic growth," said Long Chaocan, an investment consultant with China Galaxy Securities Co Ltd.

The National Development and Reform Commission, in collaboration with the Ministry of Finance, recently completed the selection process for local government special bond projects for this year. Some 38,000 projects were approved, with an estimated demand for special bonds at around 5.9 trillion yuan ($810 billion), which analysts said indicates a likely acceleration in the issuance of new special bonds moving forward.

As the impact of new treasury bond issuances wanes, the issuance of local bonds, particularly new special bonds, is expected to pick up pace in the second quarter, said Lian Ping, president of China Chief Economist Forum.

As of late April, local governments have disclosed plans to issue over 2.2 trillion yuan in local bonds in the second quarter, with 1.2 trillion yuan earmarked for special bonds.

This strategic issuance of bonds is a critical measure to secure financial resources for ongoing and new infrastructure projects, reinforcing China's efforts to stabilize and sustain its economic growth trajectory.

Transportation projects have been stepped up nationwide, reflected by progress reports revealed by major contractors and buoyed by the still strong infrastructure investment into the sector, which remained at a high level of 712.5 billion yuan in the first quarter, said the Ministry of Transport.

China's railway investment has picked up pace since the beginning of the year, the country's railway operator said.

Fixed-asset investment in the country's railway sector reached 184.9 billion yuan in the first four months, marking a 10.5 percent increase from the same period a year ago, according to China State Railway Group.

With the high-quality and efficient manner of building railways, the country is expediting the construction of a modern rail infrastructure system, the company said.

China Railway 24th Bureau Group Corp, a unit of major railway builder China Railway Construction Corp, said its team in Zhejiang province completed digging the Jiangxia Tunnel on the Wenling-Yuhuan High-speed Railway last week.

Located in Wenling, Zhejiang, the 1.58-kilometer tunnel, which has a maximum depth of 157 meters, is being built with two high-speed rails, allowing trains to journey at speeds of 350 kilometers per hour.

Despite challenging geological conditions, the project team employed advanced techniques to ensure safety and progress. Pre-construction drone surveys and precise rock clearing were conducted to secure the environment, said Di Mingjun, project manager with CR24.

The project is a major infrastructure undertaking in Zhejiang and aims to improve regional connectivity, integrating more regions isolated from HSR service into the Yangtze River Delta's transport network, Di said.

Another HSR in Zhejiang, the Hangzhou-Wenzhou High-Speed Railway entered joint testing work, with a test train departing from Tonglu East Railway Station recently, marking the countdown to the railway's full operation.

The train will journey through nine stations before reaching its destination at Wenzhou South Railway Station. When railway construction is completed, joint testing work will be arranged to evaluate and examine the project quality, as a move to ensure compliance with design standards.

The railway, which is also an undertaking built by CR24, spans approximately 260 km with a design speed of 350 km/h.

The project team has "gone the whole hog" on safety with faster and more efficient progress seen on the HSR, as it will enhance links between the two major cities and provide faster transportation choices for passengers, Di said.

Zhejiang is also strengthening its railway network to promote trade. State builders, including CR24, are helping the province build the Yiwu hub port railway line project to facilitate trade-related rail links.

The project reached a crucial phase last week as construction workers placed a 32.6-meter T-beam on a major bridge on the container special line, a milestone signifying the project's transition to its final construction phase.

"To ensure successful installation, the project team conducted rounds of safety checks and technical briefings, with construction plans focusing on efficiency and safety," a staff member with CR24 said.

The project aims to enhance logistics between the regions of Jinhua and Yiwu, and Ningbo-Zhoushan Port, and streamline Customs processes, the builder said.