Savings bonds continue to sell well

In the first quarter, the national fiscal revenue continued to maintain a recovery growth trend. The Ministry of Finance will take multiple measures to address the "one bond is hard to find" situation to meet investors' demand for purchasing bonds.

Recently, investors have shown a high enthusiasm for subscribing to savings bonds, leading to a "one bond is hard to find" situation in some banks. Li Xian, Director of the State Treasury Department of the Ministry of Finance, introduced that the electronic savings bonds issued in April were sold out at 99.7% of the planned issuance amount on the first day of issuance.

Affected by factors such as some banks reducing deposit interest rates and suspending the sale of large-amount certificates of deposit, the attention to savings bonds has further increased recently. To meet investors' demand for purchasing bonds, the Ministry of Finance will study the appropriate increase in the issuance scale and further reduce the limit for individual purchases.

On the afternoon of April 22, the State Council Information Office held a press conference to introduce the fiscal revenue and expenditure situation in the first quarter of 2024.

In the first quarter, the national general public budget revenue was 6,087.7 billion yuan, a year-on-year decrease of 2.3%. Wang Dongwei, Deputy Minister of Finance, stated at the meeting that the fiscal revenue continued to maintain a recovery growth trend according to a comparable calculation method. After excluding the impact of special factors, the national general public budget revenue was comparable to an increase of about 2.2% in the first quarter. The special factors are that the partial tax deferral for small and micro enterprises in the manufacturing industry in 2022 was collected in the first few months of 2023, which raised the base number, and the four tax reduction policies introduced in the middle of 2023 formed a tail reduction in fiscal revenue for this year.

In the first quarter, the national tax revenue was 4,917.2 billion yuan, a year-on-year decrease of 4.9%, and the tax revenue maintained a stable growth after excluding the impact of the above special factors. According to the data from the Ministry of Finance, in the first quarter, the domestic value-added tax (VAT) decreased by 7.1% year-on-year, the domestic consumption tax increased by 10% year-on-year, the corporate income tax increased by 1% year-on-year, the personal income tax decreased by 4.5% year-on-year, the securities transaction stamp tax decreased by 49.1% year-on-year, the vehicle purchase tax increased by 10.5% year-on-year, and the deed tax decreased by 6.4% year-on-year.

Wang Dongwei introduced that in the first quarter, the tax revenue in industries such as cultural tourism consumption and advanced manufacturing grew rapidly. In terms of the service industry, the tax revenue in the accommodation and catering industry, which is highly related to resident consumption, increased by 44.7%, the tax revenue in the culture, sports, and entertainment industry increased by 26.7%, the tax revenue in the transportation, storage, and postal industry increased by 6.8%, and the tax revenue in the retail industry increased by 5.7%. In terms of the manufacturing industry, the tax revenue in the first quarter decreased year-on-year, and after excluding the impact of the aforementioned non-comparable factors such as the tax deferral of small and micro enterprises in the manufacturing industry in the same period last year, it achieved stable growth.

Wang Dongwei introduced that in the first quarter, the national general public budget expenditure scale was nearly 7 trillion yuan, a year-on-year increase of 2.9%. In the first quarter, the national general public budget expenditure completed 24.5% of the budget, higher than the average level of the past three years. Among them, the progress of social security and employment expenditure was 30.7%. The 1 trillion yuan of additional national debt issued in the fourth quarter of 2023 was mostly used this year. By the end of February this year, the Ministry of Finance had allocated all 1 trillion yuan of additional national debt funds to localities. From the first quarter data, the additional national debt funds were mainly invested in urban and rural community expenditure, agriculture, forestry, and water expenditure, and disaster prevention and emergency management expenditure, which increased by 12.1%, 13.1%, and 53.4% year-on-year, respectively.

Wang Dongwei introduced that in 2024, the central government's transfer payment to localities is arranged at 10.2 trillion yuan. As of the beginning of April, the 2024 central department budget has been fully approved, and the central government's transfer payment to localities has been issued at 8.68 trillion yuan, accounting for 85.1% of the initial budget; the general transfer payment and the joint financial affairs transfer payment with conditions have all been fully issued.According to data statistics from Wind (Wang De), in the first quarter of 2024, the issuance of national treasury bonds took a significant lead over local government bonds, with their respective issuance amounts being 2.45 trillion yuan and 1.57386 billion yuan.

This year, the issuance progress of local special-purpose bonds has been relatively slow. In response to this, Wang Jianfan, Director of the Budget Department of the Ministry of Finance, stated that in the first quarter of 2024, various regions issued special-purpose bonds within the quota of additional special debt limits that were advanced, mainly for areas such as municipal construction and industrial park infrastructure, social undertakings, transportation infrastructure, and affordable housing projects. The smaller issuance scale in the first quarter compared to previous years is partly due to the increased issuance at the beginning of the year to cope with the impact of special factors such as the pandemic in previous years, and it is also related to local project construction fund demands, construction conditions during the winter and spring seasons, and bond market interest rates.

At the press conference held by the State Council Information Office on April 17, Liu Sushe, Deputy Director of the National Development and Reform Commission, mentioned that this year's special bond scale is 3.9 trillion yuan, and the National Development and Reform Commission will work with the Ministry of Finance to appropriately expand the fields where special bonds are invested and the industries where they can be used as project capital.

Wang Jianfan also stated that this year, more new energy, new infrastructure, and new industry fields will be included in the fields where special bonds are invested, adding "independent new energy storage" and "comprehensive management of key river basin water environments" to the scope of special bond support, guiding local governments to increase support for areas such as "national industrial park infrastructure," "5G integrated application facilities," "urban village renovation," "affordable housing," and "college student dormitories"; "affordable housing" and others will be included in the scope of special bonds used as project capital, further leveraging the catalytic effect of special bonds.

It is worth noting that recently, investors have been actively subscribing to savings treasury bonds, and some banks have experienced a situation where "one bond is hard to find." Li Xian Zhong introduced that the electronic savings treasury bonds issued in April sold 99.7% of the planned issuance amount on the first day, a progress rate significantly faster than the average level of recent years. Looking at the sales from the counter, most banks took over two hours to sell. Some banks experienced a momentary supply-demand contradiction on their online (mobile) platforms, with the average sales time of 32 banks' online (mobile) platforms being about half an hour, but two banks' sales lasted less than one minute, almost selling out in seconds, and another seven banks sold out within six minutes.

Information from the Ministry of Finance shows that the first and second phases of the 2024 savings treasury bonds (electronic type) were officially issued from April 10 to April 19, both with fixed interest rates and fixed terms. The first phase has a term of three years, with a face annual interest rate of 2.38% and a maximum issuance amount of 22.5 billion yuan; the second phase has a term of five years, with a face annual interest rate of 2.5% and a maximum issuance amount of 22.5 billion yuan. The combined maximum issuance amount for both phases is 45 billion yuan.

Li Xian Zhong stated that the core of "one bond hard to find" is the strong demand and relatively insufficient supply. Since April, influenced by factors such as some banks reducing deposit interest rates and suspending the sale of large-amount certificates of deposit, the attention to savings treasury bonds has further increased. To meet investors' bond purchase needs, the Ministry of Finance will study the appropriate increase in the issuance scale and further reduce the individual purchase limit. On the basis of ensuring counter sales, steadily increase the sales quota of electronic savings treasury bonds on the internet and mobile platforms. At the same time, optimize the quota allocation mechanism for certificate-type savings treasury bonds to better match outlets with actual needs, and study the optimization of the long-term arrangement of the issuance ratio between certificate-type and electronic-type savings treasury bonds to better meet investors' bond purchase needs.

It is reported that the central government has also decided to issue ultra-long-term special treasury bonds continuously in the next few years starting from 2024, specifically for the implementation of national major strategic initiatives and the construction of safety capabilities in key areas. Wang Jianfan stated that the Ministry of Finance will promptly initiate the issuance of ultra-long-term special treasury bonds. Combining the bond market demand and the implementation cycle of the construction projects corresponding to the ultra-long-term special treasury bonds, the issuance variety and term will be scientifically designed to achieve a reasonable match with the project terms. At the same time, coordinate the issuance of general treasury bonds and special treasury bonds, arrange the issuance rhythm reasonably, and ensure the capital needs of special treasury bond projects.