Since this year, the proactive fiscal policy has been driven forward. On the one hand, it has further promoted consumption, expanded investment, stabilized foreign trade and benefited people's livelihood through the issuance and use of ultra long term special treasury bond, local bonds, etc; On the other hand, by accelerating the replacement of implicit debt, we can further alleviate the pressure of local debt repayment. Experts say that looking ahead to the second half of the year, fiscal policy is expected to "accelerate" and "increase in quantity". In addition to accelerating the implementation and effectiveness of existing policies, we will also timely introduce incremental reserve policies based on changes in the situation. There is still room for "sustained efforts" in the future fiscal policy. We can consider continuing to issue additional special treasury bond, increasing the collection and storage of special debt, and issuing additional policy based financial instruments. In the second half of the year, there was still more than 7 trillion yuan in the broad fiscal space. In the first half of the year, the financial sector strengthened investment in areas such as benefiting people's livelihood, promoting consumption, and increasing stamina by issuing ultra long term special treasury bond and local bonds, and promoted the implementation of policies as soon as possible. The budget arrangement shows that China plans to issue 1.3 trillion yuan of ultra long term special treasury bond this year, an increase of 300 billion yuan over 2024. According to public data, in the first half of this year, a total of nine ultra long term special treasury bond were issued, with an issuance scale of 555 billion yuan, all concentrated in the second quarter. As of the end of June, in terms of equipment update, the fund support of ultra long term special treasury bond was 200 billion yuan. The first batch has been arranged to about 7500 projects in 16 fields, and the second batch of funds is carrying out project review and screening at the same time. In terms of trade in of consumer goods, the extra long term special treasury bond fund support is 300 billion yuan, and the first two batches of 162 billion yuan of funds have been released in January and April as planned. Data shows that sales of household appliances, furniture, communication equipment, and other related products have grown rapidly since the beginning of this year, with sales of goods related to trade in exceeding 1.4 trillion yuan. This year's issuance of local bonds reflects the characteristic of fiscal policy being proactive. In the first half of the year, the scale of local government bond issuance in China was 5.49 trillion yuan, of which nearly 1.7 trillion yuan was newly added special bonds excluding "chemical bond" funds, mainly used for project construction with certain returns; Local governments issued 452 billion yuan of new general bonds, mainly for public welfare capital expenditures. These two funds total 2.15 trillion yuan. Experts believe that the third quarter is still a window period for intensive bond issuance in various provinces, especially with the expected further increase in the scale of new special bond issuance, in order to better boost local infrastructure investment. The Ministry of Finance recently announced the arrangements for the issuance of treasury bond in the third quarter of 2025, and a total of 11 ultra long term special treasury bond will be issued in the third quarter. Compared with the bond issuance plan disclosed by the Ministry of Finance in April this year, there were four ultra long term special treasury bond issued earlier. In the view of Wen Bin, chief economist of China Minsheng Bank, in the second half of the year, there is still more than 7 trillion yuan of broad fiscal space under the full range, including 4.03 trillion yuan of deficit, 2.24 trillion yuan of special debt, and 745 billion yuan of super long term special treasury bond, which is sufficient for "surplus". Since the beginning of this year, the central government has accelerated the intensive issuance of local government bonds. Data shows that in the first half of the year, nearly 1.8 trillion yuan of refinancing special bonds were issued to replace implicit debts, with a progress rate of about 90% in the issuance of replacement bonds; Adding the issuance scale of "special" newly added special bonds for existing projects of 464.8 billion yuan, the total amount of "converted bonds" funds from the two parts is about 2.26 trillion yuan, which is the primary direction for the use of local bond funds in the first half of the year. In the first half of the year, efforts were made to accelerate the replacement of local implicit debt, easing the pressure of localized debt and reducing interest expenses. ”Wen Bin introduced. This year, it is planned to arrange special bonds for local governments worth 4.4 trillion yuan, which will be mainly used for investment and construction, land acquisition and storage, purchase of existing commercial housing, and digestion of local government arrears to enterprises. Since May, Hunan, Yunnan, Guangxi and other regions have explicitly proposed to use some special bonds to solve overdue corporate accounts. Zhang Yiqun, Vice Chairman of the Performance Committee of the Chinese Society of Finance, stated that the second half of the year is an important time for the government to resolve outstanding debts. The rapid implementation of measures to solve overdue corporate accounts will be an important benefit for engineering enterprises and will also drive further improvement in the social investment situation, providing effective support for stabilizing investment and promoting consumption. The issuance scale of special bonds for collection and storage is also constantly increasing. In June, the scale of land storage special bonds issued in Shandong, Anhui, Shanghai, Beijing, Hunan and other places exceeded 80 billion yuan, the highest monthly amount since the beginning of this year. In the first half of the year, a total of about 192.5 billion yuan of land reserve special bonds were issued, and some provinces' land reserve special bonds were mainly used to recover idle land, which is an important measure to stabilize the real estate market. Looking ahead, Tan Zhuo, Assistant General Manager of China Merchants Bank Research Institute, stated that the central government may increase its support for localized bonds. In terms of debt policy: firstly, optimize the "6+4+2" debt policy, use next year's debt quota in advance, with a scale of 1 trillion yuan, and accelerate local debt work; The second is to dynamically adjust the list of high-risk areas, optimize and adjust debt risk indicators such as red, orange, yellow, and green, and support local governments in opening up new investment spaces. In the short term, in order to achieve the goal of zero local financing platforms by the end of June 2027, the pressure reduction progress of financing platforms is expected to further accelerate by 2025. ”According to Luo Zhiheng, Chief Economist of Yuekai Securities, in the medium to long term, local governments still need to actively guide urban investment companies to undergo market-oriented transformation, achieve sustainable development, and form a virtuous cycle of "exit transformation development". According to the changes in the situation, the incremental reserve policy was launched in time. Lan Fo'an, Minister of Finance, mentioned in the State Council's Report on the Central Final Accounts in 2024 to the 16th meeting of the Standing Committee of the 14th National People's Congress recently that, in the next step, the financial department will make full use of more active financial policies, launch the incremental reserve policy in time according to the changes in the situation, focus on stabilizing employment, enterprises, markets and expectations, and fully consolidate the fundamentals of economic development and social stability. Yuan Haixia, president of China Integrity International Research Institute, said that in the future, while making full use of the established financial policy tools and accelerating the progress of government bond issuance and use, we should consider continuing to issue additional special treasury bond, increasing the efforts of special bond collection and storage, establishing a special fund for real estate collection and storage, establishing a stable foreign trade fund, and issuing additional policy financial instruments, depending on the economic operation, to expand domestic demand and improve confidence in a timely manner. In the opinion of Wang Qing, the chief macro analyst of Oriental Jincheng, the fiscal policy in the second half of the year is likely to "launch three arrows" according to the needs of the situation, that is, further increase the target fiscal deficit ratio, increase the issuance of local government special bonds and ultra long term special treasury bond. Among them, it is most necessary to increase the scale of funds supported by the trade in policy, which can directly support the transition from exports to domestic sales; Increasing the issuance of special bonds will moderately accelerate infrastructure investment and play its role as a macroeconomic stabilizer; Raising the target fiscal deficit ratio and increasing support for local finances can provide stronger support for the "three guarantees" and increase financial support for key areas such as scientific and technological innovation. (New Society)