Mar. 25 – The Xinjiang Uygur Autonomous Region is set to make history when it offers the first local government bond sale in the country amounting to RMB3 billion.

The proceeds of the bond sale will be used to finance the economic stimulus package announced last year and reinforce schools and hospitals against earthquakes, build roads, renovate old districts and construct low-rent homes.

This is the first time that a local government  will be allowed to issue bonds. The current financial crisis has led to Chinese policymakers enacting proactive fiscal policies that should to benefit local demand and increase public facility investment.

The three-year bonds will be issued by the Ministry of Finance between next Monday and April 1, while secondary market trading will begin on April 3.

Beijing said it would only shoulder RMB1.18 trillion of the RMB4 trillion stimulus plan while the rest of the funding will come from local governments, policy loans and corporate bonds.

Local governments will now be allowed to issue RMB200 billion worth of government bonds that should go to the provincial budgets.