China launched 2026 with unprecedented momentum in sovereign bond issuance, raising over RMB 1.8 trillion in January alone, signaling aggressive fiscal stimulus ahead of economic recovery targets. The pace marks a 40% increase compared to the same month last year.
- RMB 1.83 trillion in sovereign bond issuance in January 2026
- 38% year-on-year increase in total bond volume
- RMB 680 billion in special-purpose bonds for infrastructure and green projects
- Benchmark 10-year bond yields held steady at 2.35%-2.45%
- Domestic institutions absorbed 72% of new bond demand
- Part of a broader fiscal strategy targeting 5.5% GDP growth in 2026
China's Ministry of Finance announced a record RMB 1.83 trillion in sovereign bond sales during January 2026, the highest monthly issuance volume since data tracking began. This activity reflects a strategic shift toward financing infrastructure projects and local government debt refinancing amid slowing domestic demand. The issuance included RMB 680 billion in special-purpose bonds, primarily allocated to transportation, urban development, and green energy initiatives. Additionally, RMB 520 billion in general-purpose bonds were issued to support public services and social welfare programs. These figures represent a 38% year-on-year increase in total bond volume and a 27% rise in special-purpose bond allocations. Market analysts note that the aggressive pace is aligned with Beijing’s broader fiscal expansion plan, which targets a 5.5% GDP growth rate for 2026. The bond sales have helped stabilize yields on benchmark 10-year government bonds, which remained within a narrow range of 2.35% to 2.45% throughout the month, indicating strong investor appetite despite global rate volatility. The surge in issuance has impacted domestic financial markets, leading to a 1.2% increase in A-share bond indices and a rise in yuan-denominated bond ETF flows. Domestic institutional investors, including state-owned banks and pension funds, accounted for nearly 72% of the total demand, underscoring confidence in Chinese fiscal policy. However, concerns remain over long-term debt sustainability, particularly in lower-tier provinces with rising reliance on bond financing.