In 2025, China's Ministry of Finance confirmed the issuance of 625 billion yuan (approximately R$ 500 billion) in ultra-long special sovereign bonds — debt instruments with maturities of 30 to 50 years. The number is large, but what is truly impressive is the destination of the funds: to directly subsidize Chinese household consumption and finance the nationwide replacement of industrial equipment.
This is not an improvised measure. It is the continuation of a policy launched in 2024 and significantly expanded in the 2025 budget, at a time when the world's second-largest economy is facing persistent deflation, a real estate crisis, and a consumer base that simply does not want to spend.
What are the ultra-long special bonds
Ultra-long sovereign bonds are public debt instruments with maturities exceeding 20 years. In the Chinese case, the issued bonds have 30 and 50-year terms, meaning the government is spreading the fiscal cost across decades. Those who buy these bonds — banks, insurance companies, pension funds — receive relatively low annual interest (between 2.5% and 3%), but they have the security of a long-term sovereign asset.
For the central government, the advantage is clear: to raise enormous volumes of capital without pressuring the current budget. The debt service is diluted over half a century, allowing the funds to be spent now when the economy needs stimulus.
China had already issued ultra-long bonds in 2024, in the amount of 1 trillion yuan. The difference in 2025 is that a larger share — 300 billion yuan — will go directly to subsidizing household consumption, while 325 billion yuan finances the equipment and durable goods replacement policy known as "两新" (liǎng xīn).
The "两新" policy: equipment and consumer goods replacement
"两新" literally means "two renewals" and refers to two axes: the large-scale renewal of industrial equipment (设备更新, shèbèi gēngxīn) and the trade-in of old consumer goods for new ones (以旧换新, yǐ jiù huàn xīn). In practice, it works as follows:
A family with a refrigerator older than 10 years can trade it in and receive a subsidy of 15% to 20% of the value of a new refrigerator. The same applies to washing machines, air conditioners, televisions, and, most importantly, automobiles. Those who trade in an old car for a new energy vehicle (electric or plug-in hybrid) can receive a direct discount of up to 20,000 yuan — something like R$ 16,000.
On the industrial side, factories that replace obsolete equipment with more efficient and less polluting machines receive tax credits and subsidized financing. The goal is twofold: to force the modernization of the industrial park and, at the same time, generate demand for the industries that produce these new pieces of equipment.
The initial results of the policy in 2024 were encouraging. Sales of subsidized home appliances grew by 12% in the last quarter of the year, and the penetration of electric vehicles in the Chinese market surpassed 50% for the first time. The expansion in 2025 aims to maintain this momentum and solve a structural problem: household consumption represents only 38% of China's GDP, compared to 63% in Brazil and 68% in the United States.
Why China needs to stimulate consumption now
Anyone who follows the Chinese economy knows that the country's growth model has always relied on three pillars: infrastructure investment, exports, and industrial production. Domestic consumption has been a secondary concern for decades — and this worked as long as there were roads to build, cities to erect, and external markets buying everything that came out of the factories.
This model has run its course. The real estate crisis that began in 2021 with Evergrande eliminated the main store of value for Chinese families: their own apartment. With property values depreciating, people are holding on to their money. The household savings rate, which was already high, rose even further. Companies reduced investments. The Consumer Price Index (CPI) was negative for several months in 2024, creating a deflationary scenario that frightens any economist.
The government of Xi Jinping recognized — with a delay, according to several analysts — that without robust domestic consumption, the economy cannot sustain the 5% annual growth that Beijing considers the minimum acceptable. The ultra-long bonds are the chosen tool to finance this transition without blowing up the short-term fiscal deficit.
The numbers of the 2025 budget
The government's work report, presented at the "Two Sessions" (两会) in March 2025, brought the details:
• Official fiscal deficit: 4% of GDP (the largest since 1994)
• Ultra-long special bonds: 1.3 trillion yuan in total, of which 625 billion for consumption and "两新"
• Special local government bonds: 4.4 trillion yuan
• GDP growth target: "around 5%"
• Inflation target: 2% (after a practically deflationary year)
The consolidated deficit — including local governments and special funds — exceeds 10% of GDP, according to estimates from Goldman Sachs and the Rhodium Group. But unlike in many economies, Chinese debt is predominantly domestic and denominated in yuan. The central government has fiscal space: its direct debt is around 24% of GDP, low by international standards. The problem lies with local governments, with debts in the range of 40 trillion yuan accumulated in financing vehicles (LGFVs) during the real estate boom.
Comparison with Brazil: different fiscal philosophies
The comparison between China and Brazil on this topic is inevitable — and revealing.
Brazil also faces the challenge of stimulating consumption and investment without losing fiscal control. But the tools and logic are completely different.
The Brazilian National Treasury issues bonds with typical maturities of 2 to 10 years. The longest papers, such as the NTN-B maturing in 2060, pay IPCA + 6% or more — real rates that are among the highest in the world. The Selic at 13.25% (early 2025) makes any debt issuance expensive. The Lula government operates with a fiscal framework that limits real expenditure growth and relies on increasing revenue to balance the books.
In contrast, China issues bonds at 2.5-3% per year in nominal terms, with inflation close to zero. The real cost of the debt is extremely low. And as the People's Bank of China (PBOC) maintains firm control over interest rates and the banking system buys the bonds almost obligatorily, there is no risk of a "buyer's strike" as the Brazilian market sometimes imposes on the National Treasury.
Another fundamental difference: Brazil subsidizes consumption mainly through direct transfers (Bolsa Família, salary bonus) and consumer credit. China is taking a path of subsidies targeted at specific sectors — efficient home appliances, electric vehicles, industrial equipment — that simultaneously stimulate demand and accelerate the green transition.
There is no right or wrong model. But it is worth noting that the Chinese approach has an embedded industrial policy component that Brazil has largely abandoned since the era of national champions. When China subsidizes the trade-in of a combustion car for an electric one, it is feeding its own industry — BYD, NIO, Xpeng — that then exports to the world. When Brazil increases Bolsa Família, it injects income at the base of the pyramid that turns into diffuse consumption. Both strategies generate GDP in the short term, but the long-term effects diverge.
The risks of the Chinese bet
Issuing 50-year bonds presupposes that the Chinese economy will continue to grow, generating sufficient tax revenue to honor that debt until 2075. It is a considerable bet.
Population aging is the most obvious risk. China's population declined in 2022 and 2023, and projections indicate it will have 300 million fewer people by 2050. Fewer workers, fewer taxpayers, more spending on health and pensions. Who will pay for the bonds that mature in 2075?
There is also the risk that consumption subsidies become a habit. If families only buy a new refrigerator when the government offers a discount, the multiplier effect is lost as soon as the program ends. Japan faced exactly this in the 1990s and 2000s: successive fiscal packages that generated temporary demand spikes followed by new declines.
Finally, there is the issue of the productivity of spending. Chinese local governments have a long history of investing in "bridges to nowhere" and infrastructure projects with questionable returns. If a portion of the ultra-long bond funds is captured by this type of spending, the effect on real growth will be less than planned.
What this means for those following China
The issuance of ultra-long bonds is not just a fiscal measure. It is a statement of intent. Beijing is telling the market and its own people that it will spend whatever is necessary to avoid a Japanese-style deflationary spiral. The chosen instrument — debt with an extremely long maturity — reveals both the urgency of the moment and the confidence (or hope) that the Chinese economy will have room to absorb this cost in the future.
For Brazil, the lesson is less about copying instruments and more about observing how a large economy uses fiscal policy with industrial intentionality. China is not just distributing money — it is directing consumption towards strategic sectors, creating domestic demand for industries it wants to dominate globally.
Agreeing or not with the model, it is impossible to ignore the scale and ambition. And it is precisely this type of move that makes China the most interesting country to follow in 2025.
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