CHINA’S local governments sharply accelerated their bond issuance in June as they looked to ramp up infrastructure spending to support economic growth.

Net local government bond issuance rose to 717 billion yuan (US$104.31 billion) in June, the highest so far this year and accounting for a third of the first half’s total, Hao Lei, a finance ministry official, told reporters Tuesday.

Over 60 percent of the funds raised from bonds in the first six months were used for infrastructure projects such as shantytown redevelopment, and highway and railway construction, said Hao, adding that more than half of the funds went to existing projects.

In the first half of the year, local governments’ total net bond issuance reached 2.1765 trillion yuan, accounting for 70.7 percent of the annual quota, the finance ministry said.

The ministry did not give figures on local governments’ issuance of special bonds, which exclusively fund infrastructure projects.

Data on Monday showed China’s economic growth slowed to 6.2 percent in the second quarter — the weakest pace since 1992 — from 6.4 percent in the first quarter as demand at home and abroad faltered in the face of mounting U.S. trade pressure.

Fixed-asset investment in the January-June period rose 5.8 percent from a year earlier, picking up from 5.6 percent in the first five months.

Separate official data Tuesday showed fixed-asset investment project approvals in the first six months increased 81 percent by value from a year earlier.

The government began fast-tracking approvals last year as part of its push for more infrastructure spending, though analysts had cautioned it would take time for the effects to be felt.

The National Development and Reform Commission (NDRC) approved 94 fixed-asset investment projects in the January-June period, worth a total of 471.5 billion yuan, Meng Wei, a spokeswoman for the planner, told reporters.

That compared with 102 projects worth 260.3 billion yuan in the same period last year.

“We estimate the quickest turnaround time for project launch post-NDRC approval is four to six months,” ANZ said in a report Tuesday.

“In the wake of recent government efforts, we expect infrastructure investment to pick up moderately in the second half of the year to about 5-6 percent year on year.”

Fiscal spending increased 10.7 percent in the first six months from a year earlier, while revenue rose 3.4 percent.

“In the first half, the nationwide fiscal spending growth was significantly faster than revenue growth, providing a strong support for investment in key areas,” Liu Jinyun, another official with the ministry said at the same briefing.

Slower fiscal revenue growth this year was largely due to China’s tax and fee cuts, which has put pressure on local governments, the finance ministry’s Hao said.

But he added the Central Government has stepped up fund transfers to local government to help ease financial strains.

China’s tax revenues rose only 0.9 percent in the first half from a year earlier, compared with a 5.4 percent rise in the first quarter.

(SD-Agencies)