China will sharply increase funding from treasury bonds to spur growth in 2025

BEIJING (Reuters) - China will sharply increase funding from ultra-long treasury bonds in 2025 to spur business investment and consumer-boosting initiatives, a state planner official said on Friday, as Beijing ramps up fiscal stimulus to revitalise a faltering economy.

Special treasury bonds will be used to fund the new initiatives, said Yuan Da, an official of National Development and Reform Commission (NDRC) at a press conference.

These new initiatives include a subsidy programme for durable goods, where consumers can trade-in old cars or appliances and buy new ones at a discount, and a separate one that subsidises large-scale equipment upgrades for businesses.

Households also will be eligible for subsidies to buy three types of digital products this year, including cell phones, tablet computers, smart watches and bracelets, Yuan said.

In December, the NDRC said Beijing had fully allocated all proceeds from 1 trillion yuan in ultra-long special treasury bonds in 2024, with about 70% of proceeds financing "two major" projects and the remainder going towards the new initiatives.

The "major" programmes refer to projects such as construction of railways, airports and farmland and building security capacity in key areas, according to official documents.

China's central bank is likely to cut interest rates from the current level of 1.5% "at an appropriate time" in 2025, the Financial Times reported on Friday citing comments the bank made to the newspaper, as part of efforts by policymakers to shore up growth.

The world's second-biggest economy has struggled over the past few years due to a severe property crisis, high local government debt and weak consumer demand. Exports, one of the few bright spots, could face more U.S. tariffs under a second Trump administration.

Reuters reported last month that authorities have agreed to issue 3 trillion yuan worth of special treasury bonds in 2025, which would be the highest on record.

"Overall, we are confident that the economy will continue to rebound and improve this year" even as it faces new challenges, Yuan said.

(Reporting by Liangping Gao and Kevin Yao; Editing by Christopher Cushing and Shri Navaratnam)