China: MOF approves an additional RMB550bn bond issuance quota to ensure full-year growth target is reached

Bottom line: Following the 28 September State Council meeting and credit easing measures announced on 29 September, the Ministry of Finance (MOF) recently approved an additional RMB550bn local government bond issuance quota using those quotas carried over from previous years, in line with our expectations. We expect government bond issuance and the deployment of proceeds to accelerate in the coming weeks, alongside faster implementation of the RMB800bn New Policy-Based Financial Instrument. The additional quota comprises RMB300bn of local government general bonds (LGGB) to strengthen local government finances and RMB250bn of local government special bonds (LGSB) prioritizing regions with ready-to-go projects for Q4, major economic powerhouse provinces, and "Six Networks" projects. The RMB550bn is equivalent to 4.6% of the RMB11.9tn government bond new issuance quota approved in this year's budget report and 0.4% of nominal GDP, by our estimates. The incremental policy measures introduc