On May 15th, the reserve requirement ratio cut was officially implemented, with a 0.5 percentage point reduction in the reserve requirement ratio, releasing about 1 trillion yuan of long-term liquidity to the financial market. On May 8, the People's Bank of China (hereinafter referred to as "the People's Bank of China") carried out a 7-day reverse repurchase operation of 158.6 billion yuan in the form of fixed interest rate and quantitative bidding, and the operating interest rate was lowered from 1.50% to 1.40%. The industry believes that, based on past situations, after the implementation of the reserve requirement ratio and interest rate cuts, local government bond issuance is also expected to see an increase in volume. According to Wind data, as of May 19th, a total of 3874.1 billion yuan of local bonds have been issued in various regions this year, compared to 2196.1 billion yuan in the same period of 2024. In comparison, the issuance of local bonds has significantly accelerated this year. At the same time, the scale of newly issued special bonds in various regions has reached 1371.1 billion yuan, a significant increase compared to the same period in 2024 (855.8 billion yuan). Zhu Hualei, Senior Investment Advisor of Shaanxi Jufeng Investment Information Co., Ltd., analyzed in an interview with reporters that as of May 19th, the issuance of new special bonds in various regions has increased by 60% year-on-year, reflecting a significant improvement in the issuance speed this year compared to last year. With the promotion of the "self audit and spontaneous" pilot program, the supply of newly added special bonds will gradually increase, and it is expected that the overall issuance scale in the second quarter will increase compared to the first quarter. In the view of the Chief Economist of CITIC Securities, the number of times the central bank has announced "double cuts" (interest rate cuts and reserve requirement ratio cuts) in history is not many. After the two "double cuts" since 2020, local government bond issuance has seen an increase in volume. The "double reduction" provides sufficient liquidity for the market. Referring to the experience of local bond issuance after the "double reduction" in the past, local bonds are expected to be issued in large quantities in the second quarter of this year. Zhu Hualei also believes that reducing reserve requirement ratios and interest rates has released long-term liquidity in the market, increased the long-term funding supply of the banking system, eased the market liquidity tension caused by concentrated issuance of local bonds, lowered the subscription costs of financial institutions, and provided a more abundant funding environment for local bond issuance. At the same time, the policy of reducing reserve requirement ratios and interest rates has sent a positive signal to the market, indicating that the government has taken effective measures to stabilize growth. While stabilizing market expectations, it has also enhanced investors' confidence in local bonds, which is conducive to accelerating the issuance of local bonds. In addition, the coordination between monetary policy and fiscal policy is an important guarantee for accelerating the issuance of local bonds. Lowering reserve requirement ratios and interest rates provides ample liquidity to support the implementation of fiscal policies, ensuring the smooth issuance of local bonds and promoting the construction of major projects. This year's Government Work Report proposed to "implement more proactive fiscal policies", including "plans to arrange 4.4 trillion yuan of local government special bonds, an increase of 500 billion yuan over the previous year, focusing on investment and construction, land acquisition and storage, purchase of stock commercial housing, and digestion of local government arrears in corporate accounts", "plans to issue 1.3 trillion yuan of ultra long term special treasury bond, an increase of 300 billion yuan over the previous year", etc. Mingming believes that in the first quarter of this year, fiscal funds were concentrated and the net financing scale of government bonds significantly expanded, providing strong support for macroeconomic operations. Among them, Wind data shows that the issuance of new special bonds in the first quarter was about 960 billion yuan, nearly 1.2 trillion yuan in the first four months, and the progress of new special bond issuance is expected to further accelerate in the future; The extra long term special treasury bond are planned to issue 1.3 trillion yuan in the whole year, and have been pre allocated for use in the first quarter. Driven by the aforementioned debt instruments, the pace of fiscal expenditure has significantly accelerated, becoming a key force supporting the repair of domestic demand. Looking ahead, fiscal policies may continue to focus on promoting consumption, new infrastructure, and technological innovation, strengthening policy implementation and fund transmission to ensure the continuation of the trend of domestic demand recovery and to build strong support for the annual growth target. (New Society)