China auctioned special treasury bonds worth 70 billion yuan (10 billion U.S. dollars) on Tuesday, aiming to help economic recovery from the COVID-19 pandemic. 

It is the third batch of a planned bonds issuance worth 1 trillion yuan in total, which started on June 18 and will stretch to the end of July. 

On June 18, the Ministry of Finance auctioned off 100 billion yuan worth of the bonds, followed by another two auctions of five-year bonds and seven-year bonds, both worth 50 billion yuan. 

The previous two rounds of special bonds offering date back to 1998 to deal with the Asian financial crisis, and 2007, just before the global financial crisis. This time, it's for the COVID-19 pandemic, which has cost the country a 6.8 percent contraction in the first quarter from a year ago. That's the first contraction ever since the country's opening up in 1978. 

The size of the bond issuance is relatively moderate, but experts say the effect can be amplified, as China's treasury bonds are very low risk and can be used as equities to refinance. 

"The special bonds' total impact on the economy will be much larger than 1 trillion yuan. The bonds can be used as equity. It can be used together with loans from banks, investment from private companies, etc. So, this can bring multiple trillions of RMB into the economy," said Chen Jiahe, chief investment officer of Novem Arcae Technologies. 

70 percent of the special treasury bonds will have a 10-year term. Twenty percent will have a maturity of five years and the remainder will be seven-year bonds. That compares to up to 10, 15 and 20 year long maturities in the previous two rounds. Experts say the shorter maturity dates support the government's prediction that the virus-related economic challenge will be short-term. The bond rates vary from 2.4 to 2.7 percent annually.

"The rate paid by the bonds is attractive for both institutional and individual investors. If you compare them with individual bank deposit rates, if you compare with the financial costs of institutional investors, they are higher than the regular rates that individual investors and institutional investors can get," Chen said.

"That is why you can see the bonds have been quite popular on the market right now."

The funds that will be accumulated throughout the bond sales will be used to offset the government's massive spending during the height of the pandemic in the country. The funds will also be used to support further economic stimulus packages to accelerate the reopening of businesses and industries throughout the nation.

Chinese individual investors can purchase the special treasury bonds either in banks or on their bank apps. The starting value is only 100 yuan (14 U.S. dollars).