In 1981, China issued less than 5 billion yuan in treasury bills, and the balance of treasury bonds in 2020 will reach 20.89 trillion yuan.


  Resumption of issuance for 40 years, national debt benefits the country and the people

  Starting from October 29th, China’s government bonds will be included in the FTSE World Treasury Index. By then, all three major global bond indexes will be included.

  This year marks the 40th anniversary of the resumption of the issuance of China's national debt.

Since the State Council decided in 1981 to resume the issuance of treasury bonds and promulgated the "Regulations of the People's Republic of China on Treasury Bills," China's treasury bonds have grown and steadily expanded globally in the past 40 years.

How does China's national debt raise financial funds and enrich personal investment channels?

What important role has it played to benefit the country and the people?

  High income and low risk, investment channel favored by residents

  For national debt, many older people prefer to use the term "treasury bonds."

  "In order to buy treasury bills, the old neighbours are not afraid of the cold and heat. They can stay outside the bank at four or five in the morning. Some elderly people in good health can even stay up for the night." Recalling the hot scene of queuing to buy savings treasury bonds. The 81-year-old grandmother of Beijing Min Wang is still fresh in her memory.

  Why is there a high enthusiasm for buying?

"Everyone knows that Treasury bills are safe, and interest rates are higher than fixed deposits. Moreover, the state funds were not as abundant as they are now, and residents buying Treasury bills also support the country's construction." Grandma Wang said.

  For investors, compared with other investment targets, treasury bonds do have many advantages: savings treasury bonds are issued by the Ministry of Finance on behalf of the central government, with high credit ratings and good security; fixed issuance rates, tax-free interest, and stable returns; Yuan is the starting point for subscription, which can be handled by the underwriting bank. There is no need for risk assessment before subscription. There are multiple issuance periods and the subscription business is easy to handle; it can be redeemed in advance or used as a pledge for pledge loans at the original purchasing bank, with flexible cash realization.

  In the more than 40 years since the resumption of the issuance of national debt, the types of issuance have become more abundant, and the product structure has been continuously optimized, which has greatly enriched individual investment channels.

  After the promulgation of the “Regulations of the People’s Republic of China on Treasury Bills”, the target of treasury bill issuance expanded from state-owned enterprises and units to individuals in 1982; in 1987, the Ministry of Finance issued key construction bonds; in 1988, the pilot project for the circulation and transfer of treasury bills began to be implemented; in 1989, the state issued value preservation Public bonds and special treasury bonds; In 1992, the Ministry of Finance issued non-physical treasury bonds, which were later renamed as book-entry treasury bonds in 1995; in 1994, the Ministry of Finance and the People’s Bank of China issued certificate-type treasury bonds, which were later renamed savings treasury bonds (certificate-type) in 2017; In 2006, the Ministry of Finance issued the first savings bonds (electronic).

  Nowadays, most young investors choose to buy savings government bonds (electronic).

Many elderly people do not use smart phones and the Internet well, and still choose to buy savings bonds (certificate type).

"Electronic type I'm afraid it will be easy to forget, but I still buy proof type. I can see and touch, hold it in my hand, and feel at ease!" Grandma Wang said.

  With the continuous expansion of subscription channels such as online banking and mobile banking, the subscription of treasury bonds has become increasingly convenient.

The third and fourth tranches of 2021 Treasury Bonds (electronic) issued in May of this year launched mobile banking agency sales channels. 28 of the 39 underwriting syndicate members were also sold through online banking. 4 companies including Industrial and Commercial Bank of China can also Through mobile banking agency sales, China's treasury bonds have entered the era of "handheld purchase".

  In an interview with our reporter, Zhang Licheng, a researcher at the Chinese Academy of Fiscal Sciences, said that over the past 40 years since the resumption of the issuance of national debt, the country has achieved a "win-win" of national financing "benefiting the country" and social investment "benefiting the people" in the process of China's socialist modernization.

  "From the perspective of'benefits', in the process of moving toward a middle-income country, increasing household wealth and social capital need to seek low-risk investment channels." Zhang Licheng said that national debt investment is a process of market-oriented reform to improve the investment market system. The basics.

At present, China's treasury bond market has become an important place with a relatively large capacity that can fully satisfy financial financing and investor investment.

  Raise financial funds to promote national economic development

  From the perspective of “profit for the country”, the government relied on national credit and achieved low-cost financing through the issuance of national debt.

  What are the uses of the funds raised from the issuance of treasury bonds?

Zhang Licheng introduced that in the process of China’s economic take-off, the funds raised from the issuance of treasury bonds were used to moderately advance the construction of large-scale infrastructure, or to provide financial guarantees for solving key problems in special periods, in order to make up for shortcomings in national economic development and promote high-quality development, etc. The aspect has played an important role that cannot be replaced.

For example, in 2020, in order to raise financial funds, coordinate the promotion of epidemic prevention and control, and promote economic and social development, China issued 1 trillion yuan of special treasury bonds to fight the epidemic. The funds raised will reach the grassroots level of cities and counties through a special transfer payment mechanism, directly benefiting enterprises and the people. It is mainly used to ensure employment, basic people's livelihood, and protection of market entities, including supporting tax and fee reduction, rent and interest reduction, and expansion of consumption and investment.

  At the same time, the government bond yield reflects the relationship between supply and demand in the bond market, and has become an "anchor" for institutions to refer to when issuing bonds.

  Liu Fan, deputy general manager of China Central Government Securities Depository and Clearing Co., Ltd., introduced that the current treasury bond yield curve is widely used. SDR) interest rate basket; ChinaBond Treasury Bond Yield and ChinaBond Valuation are recommended by ChinaBond Treasury Bond Yield and ChinaBond Valuation as reference benchmarks for insurance reserve measurement and commercial bank bond investment measurement in the insurance industry; ChinaBond Valuation based on ChinaBond Treasury Bond Yield Curve It is the bond valuation benchmark for securities funds and the reference benchmark for the pricing of loan transfers, insurance asset management products and wealth management products.

"In terms of market benchmark pricing, the treasury bond yield curve plays an important and fundamental role." Zhang Licheng said.

  "In the past 40 years, regardless of the annual issuance scale, stock scale or maturity structure variety, China's national debt has long been different from what it used to be." Zhang Licheng said.

  From the perspective of issuance and stock scale, in 1981, the issuance of treasury bills was less than 5 billion yuan, and the balance of China’s treasury bonds in 2020 reached 20.89 trillion yuan; China’s treasury bonds issued 7.17 trillion yuan in 2020, which was nearly 1,800 times that of 1981, accounting for the country’s bonds that year. 12.2% of the circulation.

From the perspective of the term structure, at the beginning of the resumption of issuance, the term structure of Treasury bills was basically medium-term bonds of 5-9 years. In 1994, six-month and one-year short-term government bonds were introduced, and in 1996, three-month short-term government bonds were introduced.

"Currently, China's treasury bond issuance period covers short, medium and long-term, and can effectively smooth the debt repayment pressure in the future through a rich selection of bond maturity structures." Zhang Licheng said.

  The market liquidity of treasury bonds continued to improve, and the market depth continued to increase.

"In 2020, the exchange rate of Chinese government bonds reached 2.4 times, which is at a relatively high level among the world's major economies. It has surpassed Japan and approached the level of annual exchange transactions of German government bonds." The transfer market for Treasury bills was officially opened in the same year, and the investment attributes of Treasury bills were gradually established.

At present, a multi-level treasury bond trading market system has been formed in the inter-bank bond market, exchange bond market, and commercial bank bond counter market.

  According to Zhang Licheng's analysis, China's national debt issuance has made great progress in the past 40 years. On the one hand, it has benefited from the rapid growth of China's economic aggregate, and the demand for national debt and the capacity of society to undertake the development of national debt by leaps and bounds.

On the other hand, thanks to the reform and development of the national debt in compliance with the market orientation, the continuous improvement of the regulatory system and the continuous improvement of regulatory capabilities have provided institutional guarantees for the stability and long-term development of the national debt.

  Included in major bond indexes to attract global investors

  In recent years, national debt has become more and more "international."

  "Come in," and the door to China's treasury bond market is opening wider and wider.

From October 29th, Chinese government bonds will be included in the FTSE World Treasury Bond Index. After the inclusion process is completed, the weight of Chinese government bonds in the index will be 5.25%. By then, Chinese government bonds will be included in all three major global bond indexes.

Standard Chartered Bank predicts that by the end of 2021, foreign ownership of Chinese government bonds may rise from 9.1% at the end of 2020 to 11.5%-12%. International investors are expected to become the second largest buyers of Chinese government bonds, second only to Chinese businesses. Bank.

  "The recognition of international investors is actually based on a rational judgment on the good growth potential of the Chinese economy in the prevention and control of the epidemic." Zhang Licheng said.

  "Going out", RMB treasury bonds have accelerated to Hong Kong, Macau and overseas markets, and are welcomed by domestic and foreign investors.

  "From the scale of issuance, the scale of China's issuance of offshore RMB treasury bonds continues to increase." Zhang Licheng introduced that since 2009, the Ministry of Finance has issued RMB treasury bonds in Hong Kong and other offshore markets, actively constructing the yield curve of overseas sovereign bonds, and RMB treasury bonds have been in Hong Kong over the years. The scale of issuance has grown steadily, reaching a peak of 28 billion yuan.

As of the end of August, the Ministry of Finance has issued a total of 218 billion yuan of renminbi government bonds in Hong Kong, 3 billion yuan of renminbi government bonds in London, and 2 billion yuan of renminbi government bonds in Macau, with a balance of 50.1 billion yuan.

  Since the beginning of this year, as the domestic epidemic prevention and control and economic recovery and development have achieved good results, the attractiveness of RMB assets to global investors has continued to increase, and Chinese government bonds have attracted more overseas investors to actively subscribe.

  A few days ago, the Ministry of Finance issued the first tranche of RMB 8 billion in renminbi government bonds in Hong Kong this year, including a 2-year term of 5 billion yuan, with a subscription multiple of 3.08 times; a 5-year term of 2 billion yuan, with a subscription multiple of 3.3 times; and a 10-year term of 1 billion yuan, with a subscription multiple. 2.56 times.

Zhang Licheng said that this reflects the strong attractiveness of Chinese government bonds to global investors. "Overall, the'going out' of Chinese government bonds has not only strongly promoted the internationalization of the renminbi, but also helped support the development of Hong Kong’s offshore renminbi market and consolidate Hong Kong. Status as an international financial center."

  "At present, the annual issuance scale of offshore RMB government bonds is not large, and the maturity varieties of government bonds are only in a few key maturities, and the market space is still broad." Zhang Li admitted.

  "In the future, in the process of implementing the national debt'going out' strategy, we should seize the favorable opportunity that China's economy continues to improve under the influence of the global epidemic, and the attractiveness of Chinese government bonds to international investors continues to increase, and strengthen and improve the yield curve of overseas sovereign bonds. Such as the construction of basic systems, give play to the role of Chinese government bonds in providing pricing benchmarks for renminbi products, and continuously enhance the breadth and depth of Chinese government bonds' "going global"." Zhang Licheng said.

  Reporter: Wang Wenzheng

Keywords: treasury bonds, china, issuance, debt., debt, resumption, government bonds, country, roles, bond indexes, bills, treasury bond yield curve, zhang licheng, people, funds