Core Viewpoint - Local government special bonds have played a significant role in stabilizing investment, expanding domestic demand, and addressing shortcomings, but several issues have emerged that need to be resolved to enhance their effectiveness and leverage social capital [1]. Issues Faced by Special Bonds Used as Capital - Insufficient project income distribution rights lead to a lack of motivation for local governments to utilize special bonds, particularly in sectors like railways and toll roads where lower-level governments have minimal income rights [3]. - There is competition among policies in supported areas, causing special bonds to be overshadowed by other financing methods, which limits their usage [4]. - The inability to separate assets from market financing projects creates a deadlock between governments and financial institutions regarding asset collateralization [4]. - The use of special bond funds is restricted due to scattered regulations, making project units prefer more flexible non-bond funds [6]. Recommendations for Improvement - Shift the usage approach from debt leverage to equity leverage, expanding the scope of special bonds to include operational fixed asset investments in both state-owned and private enterprises [7]. - Broaden the application areas of special bonds, as by 2025, the fields for special bonds used as capital will expand to 22, but further optimization is needed for integration with PPP projects [7]. - Encourage the participation of market financing by formulating policies that support social investors like insurance companies and funds in special bond projects [8]. - Enhance project management to prevent the emergence of new hidden debts, especially as the proportion of special bonds used as project capital increases to 30% by 2025 [9].