The Ministry of Finance and Ministry of Transport recently announced that local governments will have to issue bonds to finance highways rather than take out loans.

According to the Budget Law and the central government's requirements for local government debt management, issuing bonds is the only channel that local authorities have to finance the construction of highways.

The new highway bonds are conducive to not only providing financing for highway construction, but also the management of local governments' finances.

Bonds will be used to finance the construction of national highways, local highways and local first-class tollways. And tolls will be collected to cover the principal and interest.

The ministries also stipulated that the highway bonds should give priority to the construction of national highway projects that support the three major strategic plans: the Belt and Road Initiative, the coordinated development of Beijing, Tianjin and Hebei province, and the Yangtze River Delta Economic Zone.