China's National People's Congress Budget Committee and the Ministry of Finance have approved a State Council proposal to allow local governments to refinance their off-balance-sheet debt, aiming to reduce hidden local government debt and support the economy. The plan involves raising the local government debt ceiling by 6 trillion yuan (about $840 billion) to substitute existing hidden debts, increasing the 2024 local government debt ceiling to 35.52 trillion yuan. According to Finance Minister Lan, China's hidden local government debt stood at 14.3 trillion yuan at the end of 2023, and the government aims to reduce it to 2.3 trillion yuan by 2028. The debt swap plan is expected to save 600 billion yuan in interest costs.
