On September 26, the Politburo of the Communist Party of China convened and highlighted the need to “issue and effectively utilize super-long-term special government bonds and local government special bonds to better leverage government investment.”
In a press conference on October 8, a representative from the National Development and Reform Commission stated the importance of “making full use of local government special bonds,” urging for a faster implementation and utilization of funds from these bonds, thus promoting more tangible outcomes in projects. Recently, I visited locations such as the Chongqing High-tech Zone, Wuhu in Anhui, and Jingzhou in Hubei to observe how local governments are using special bonds to fill gaps, optimize structures, and stabilize growth while accelerating the creation of physical outputs.
**Chongqing High-tech Zone: Revitalizing Old Residential Areas to Address Livelihood Concerns**
Stepping into the Longyin community in Chongqing High-tech Zone, one is greeted by bright orange rubber tracks, a striking yellow and white building facade, and well-equipped sports facilities. “In the past, there were leaks, crumbling walls, and poor conditions in the community. Now, all those issues have been resolved, and we’ve got so many new amenities – it’s really nice!” said Li Hong, a resident who came out early to exercise.
Established in 2003, Longyin community faced increasing problems related to fire safety, drainage, parking, and green spaces as it aged. In April 2022, personnel from the Chongqing High-tech Zone Construction Bureau, the local government, the Longyin community, and the Chongqing Science City Urban Construction Group conducted in-depth research and decided to revamp the area.
Renovating old residential communities is a crucial initiative to address imbalances in urban development, improve public welfare, and enhance residents’ sense of security and happiness. However, challenges such as long project cycles, uncertain returns, cumbersome procedures, and complex maintenance have hindered private investment. In recent years, Chongqing High-tech Zone has identified government special bonds as a key funding source for these renovations. By the end of 2022, the Chongqing Finance Bureau applied for special bond funds from the municipal finance department to support the first phase of Longyin community’s renovation.
With funding secured, the renovation officially began in March of last year. How can they ensure that the special bonds are used effectively? Li Qiyuan, Deputy Director of the Chongqing High-tech Zone Finance Bureau, explained that they implemented a rigorous financial management system according to the city’s guidelines on managing special bonds throughout their lifecycle. “We require project owners to maintain separate accounts for the special bond projects to ensure funds are not misallocated and that they report expenditure progress on a monthly basis, with annual audits conducted by regulatory bodies,” he said.
Currently, the renovation project benefits 2,615 residents and covers an area of 376,800 square meters. Following the guidelines on performance evaluation for special bond funding, the Longyin community project is set to undergo a performance review next year. “The finance department will consider the evaluation results when adjusting the funding amounts for project bonds during construction and operations, until the project meets community satisfaction,” Li noted.
In recent years, the Chongqing High-tech Zone has employed various financing methods, including general and special government bonds, to support public welfare projects in education, healthcare, renovation of old residential areas, and underground infrastructure improvements.
**Wuhu, Anhui: Building an Intelligent Connected Vehicle Industrial Park to Propel Industrial Upgrading**
Entering the intelligent factory of Chery Automobile Co., Ltd. in Wuhu, the welding workshop spans 55,000 square meters, bustling with over 660 robotic arms executing welding, adhesive application, quality inspection, and material handling tasks. After renovations in March last year, the automation rate of the welding shop has reached 97%, with a monthly output of over 1,200 car bodies.
In 2021, Wuhu planned the construction of an intelligent connected vehicle industrial park led by Chery Automobile in the Economic Development Zone. Following project approval from the National Development and Reform Commission, the Anhui Province government is set to issue special bonds to fund the industrial park and its accompanying logistics facilities.
“As of March this year, we have created a number of production and logistics workshops through the use of bond funds, sufficiently meeting the operational needs of enterprises,” said Kong Wen, Deputy Director of the Wuhu Economic Development Zone Finance Bureau.
“The government constructs the factory and then leases it to enterprises,” said Gao Liang, project manager of Yinhu Industrial Co., Ltd. Thanks to the support from local government special bonds, the enterprise saved a significant amount on construction investments, allowing them to allocate more funds toward research and development.
In one of the workshops at the Binjiang Logistics Park in Wuhu’s Economic Development Zone, workers were busy testing a newly installed automated storage system. “Once operational, this system will enable automatic storage and retrieval of items, increasing our packaging workshop’s space efficiency by 35% to 40%,” said Sun Feng, the head of the packaging department. The three packaging workshops, each occupying 50,000 square meters, were built with the help of local special bonds, thus supporting the enterprise’s export expansion.
As principal projects in the industrial park are completed and operational, numerous upstream and downstream companies have been drawn to the area. “The concentration of automakers like Chery and its related enterprises further consolidates Wuhu’s automotive industry advantages, enhancing industrial levels and innovation capabilities,” noted Wu Shisheng, Deputy Secretary of the Wuhu Economic Development Zone Party Committee.
This year, Wuhu issued new special bonds for project construction, prioritizing support for 118 projects. “We will continually optimize the use structure of these bonds to further support innovation-driven and industrial upgrading initiatives, providing momentum for high-quality economic development in Wuhu,” stated Ning Bo, Mayor of Wuhu.
**Jingzhou, Hubei: Developing a Smart City 5G Network to Support New Infrastructure Growth**
In Jingzhou’s Shashi District along Taishiyuan Road, one can look up to the clear blue sky and golden sycamore leaves, without a tangle of overhead wires in sight. “After renovation, all the wires are now underground, making it safer and more stable,” said Peng Tianjiao, General Manager of Jingzhou City Communication Pipeline Investment Co., Ltd.
The pipeline construction and overhead wire remediation along Taishiyuan Road is part of Jingzhou’s smart city 5G infrastructure project. The initiative aims to create a unified 5G network across the city, promoting standardized management and operations while ensuring that all pipelines are established underground and managed intelligently.
Given the long project timelines, high investment costs, and slow returns, during the initial construction of Taishiyuan Road, the pipeline company leveraged special bond funds to concurrently carry out this infrastructure work. “This project involves new infrastructure, and once completed, it can generate returns through pipeline leases while also stimulating further investment and economic growth,” Peng explained.
In June of this year, Jingzhou successfully applied for additional provincial government special bonds for the ongoing smart city 5G infrastructure project. “Preliminary calculations indicate that aside from the special bonds, the overall project could directly attract over 80 million yuan in investment,” Peng remarked, noting that the project is expected to bring in even more social investments once complete.
“In recent years, we have strongly supported the development of new infrastructure to unleash the potential of digital technology for urban development,” said a representative from Jingzhou’s Development and Reform Commission. According to reports, in 2023, the city constructed 2,126 new 5G macro stations, with infrastructure investment continuing to expand through the first half of the year.
To ensure that funds are effectively utilized, Jingzhou is progressively improving the performance evaluation mechanism for special bond funds, engaging third-party companies to conduct performance assessments on related projects. “We supervise the entire process, from project initiation, bond issuance, fund management, to asset creation and debt repayment, ensuring that tangible outcomes are achieved promptly,” said a representative from Jingzhou’s Finance Bureau.
(Source: People’s Daily)
