The central bank released the latest financial statistics over the weekend, and the decline in total social financing in April surprised private economists, and coincidentally, household and corporate deposits also fell. Both the financing side and the deposit side declined at the same time. This is something that has not been seen in recent years.
How to solve such a thing? In the face of the abnormal decline in financial data, the Ministry of Finance has taken a big move. After 20 years, ultra-long-term government bonds were reintroduced, with a maximum duration of 50 years. In October 2023, the Chinese government announced the issuance of an additional 1 trillion yuan of government bonds to focus on supporting local governments in post-disaster reconstruction.
In April this year, the Ministry of Finance has clearly supported the central bank's gradual increase in treasury bond trading in open market operations, which was once considered by the market to be the beginning of a major monetary release, the Chinese version of the Fed's monetary easing, and in fact, it is indeed the case. But at that time, some people felt that there was a problem, thinking that the central bank did not have many available large amounts of treasury bonds to buy and sell in the market. Unexpectedly, within a few days, the news of the issuance of long-term treasury bonds by the financial department came out.