China pilots revenue bonds

BEIJING - China will attempt to widen financing channels for local governments through a pilot revenue bond program.

In a statement Wednesday, the Ministry of Finance (MOF) said provincial areas would be encouraged to issue bonds to finance public projects that generate stable income.

The new product, equivalent to US revenue bonds, is another step toward standardizing local authority fund-raising and defusing the risk of accumulating debt.

The MOF said the bonds will satisfy capital needs in key areas and attract private capital into public services.

As part of the program, bonds on land reserves were greenlighted June, and on toll roads in July.

Public projects should bring in enough cash to repay capital and interest and governments should be more aware of their asset status, disclosing information, including bond maturity and fund use, in a timely manner, the MOF said.

Bond issues should not exceed annual quotas approved by the central government.

At the end of last year, more than 5.5 trillion yuan ($820 billion) had been issued, well below the cap of 6.5 trillion yuan.