Hunan and Yunnan are using special-purpose bond funds to balance their books, the first provinces to do so as Beijing stresses financial risk control.
Hunan has become the first province in China to use the proceeds of special-purpose bonds to guarantee government payments to enterprises, with 20 billion yuan (US$2.78 billion) allocated for this year.
The inland province made the adjustment to its annual fiscal budget last month, marking the first time the bonds – typically earmarked for revenue-generating construction projects – will be used to cover government arrears.
Proceeds will be distributed based on eligible outstanding debts from existing investment projects, according to a statement from the province’s department of finance issued last week.
