China plans RMB1trn to fund construction projects

China is planning at least RMB1trn ($161 billion) in bonds to fund construction projects that can help address a struggling economy. China Development Bank and the Agricultural Development Bank of China, which are referred to as policy banks because they carry out government objectives, will issue bonds to fund construction. 

The Postal Savings Bank of China will buy the debt, aided by liquidity from the central bank via relending facility. The Ministry of Finance will subsidize 90% of the interest on the securities. 

"Given China's weak growth momentum, further stimulus is highly likely. However, the impact on the economy will be limited, as the RMB1trn only accounts for 2% of total fixed asset investment for this year", says Commerzbank.