Core Viewpoint - The issuance of local government bonds in China has significantly slowed down in the first five months of 2023, with a total issuance of 2.82 trillion yuan, a year-on-year decrease of 20.25% [2]. Summary by Sections Issuance Data - From January to May 2023, local government bonds totaled 2.82 trillion yuan, down 20.25% year-on-year, with a net financing amount of 1.65 trillion yuan, a decrease of 34.04% [2] - New bond issuance reached 1.45 trillion yuan, down 31.92% year-on-year, completing only 31.31% of the annual new limit of 4.62 trillion yuan, which is 16 percentage points slower than the same period last year [2] - Special bond issuance was 1.15 trillion yuan, down 34.69% year-on-year, completing 29.61% of the annual new limit of 3.9 trillion yuan, also slower than last year's pace by 17 percentage points [2] Recent Trends - In June, the issuance of local bonds accelerated, with several provinces including Tibet, Yunnan, Zhejiang, and Jiangsu announcing their issuance plans [2] - In May, the issuance of new special bonds increased significantly to 438.3 billion yuan, a month-on-month increase of 350 billion yuan, indicating a recovery in issuance speed [3] Factors Affecting Issuance - The slow issuance of local bonds is attributed to several factors, including the reduced urgency for large-scale issuance due to the good economic performance at the beginning of the year and the significant funds from the previous year's national bond issuance [8][9] - The central government's policies have also shifted the focus towards managing existing debt rather than increasing new debt, leading to a more cautious approach in bond issuance [10] Impact on Local Finances - The slowdown in special bond issuance has increased financial pressure on local governments, particularly affecting their ability to maintain essential expenditures such as social welfare, salaries, and operational costs [12][15] - The reliance on special bonds has grown as land revenue decreases, making it a crucial source of funding for local governments [13][15] Future Outlook - The issuance of special bonds is expected to maintain a rapid pace in June, with plans for approximately 510 billion yuan in new special bonds across 30 provinces [3][16] - The overall bond issuance is anticipated to peak in the third quarter, as local governments aim to meet their annual financing needs [16]