Local government bonds in China are generally divided into general bonds and special bonds. The financing needed for the development of public welfare undertakings without expected income is issued by local governments, and those with certain expected income are financed by issuing special bonds. Government special bonds refer to bond financing with certain expected returns.
Bonds are securities issued by debtors such as governments, enterprises and banks in accordance with legal procedures in order to raise funds and promise creditors to repay the principal and interest on a specified date. Bond is a kind of financial contract, which is a creditor's right and debt certificate issued to investors when the government, financial institutions and industrial and commercial enterprises directly borrow money from the society and promise to pay interest at a certain interest rate and repay the principal according to the agreed conditions. The essence of a bond is a certificate of debt, which has legal effect. There is a creditor-debtor relationship between bond buyers or investors and issuers. Bond issuers are debtors and investors (bond buyers) are creditors. Bond is a valuable security. Because the interest of bonds is usually determined in advance, bonds are a kind of fixed-interest securities. In countries and regions with developed financial markets, bonds can be listed and circulated. In China, the typical government bonds are short-term treasury bills.