China’s 2026 Ultra-Long Bond Plan Targets Debt Risks, Growth

- China to issue ultra-long special government bonds in 2026. - Initiative to finance national projects and address local debt risks. China’s Central Economic Work Conference has unveiled plans to issue ultra-long special government bonds in 2026, marking a pivotal step in the nation’s fiscal policy strategy. The initiative will fund critical national projects, enhance economic security, and tackle local government debt risks, reflecting a commitment to long-term, stable economic growth. On December 13, 2025, Cryptopolitan reported these bonds will finance key national priorities, including major equipment upgrades and trade-in programs for consumer goods. Although specific projects remain undisclosed, the strategy underscores China’s focus on addressing local government debt while avoiding hidden liabilities. Alongside the bond issuance, Chinese authorities will implement targeted liquidity measures, such as adjusting interest rates and reserve requirements, to ensure the financial system has sufficient liquidity. The government confirmed it will maintain the 2026 budget deficit and spending levels at necessary thresholds, balancing fiscal discipline with strategic priorities. Stabilizing the property market is another essential element of this plan. The government will manage new housing supply, clear existing inventory, and convert unsold properties into affordable housing units. Following the announcement, Chinese property developer stocks saw a significant boost, which reflects market optimism about the renewed focus on housing reforms. This policy shift occurs as China’s economy performed stronger than expected in 2025, with record-breaking exports driving an unprecedented goods trade surplus of over $1 trillion. However, the nation still faces challenges, such as a sharp decline in fixed-asset investments during the year's second half, which highlights ongoing domestic vulnerabilities. To address these issues, the government will increase budgetary spending on key investment projects in addition to the ultra-long bond strategy. By emphasizing sustainable, long-term fiscal measures, China signals a transition from short-term stimulus to a growth-driven economic framework. This approach reflects a strategic balance between financial stability, economic expansion, and structural reforms as the nation positions itself for new challenges in 2026.