China Unveils $1.4 Trillion Program to Swap Hidden Local Government Debt

Nov 8, 2024, 09:20 AM

China has approved a 6 trillion yuan ($840 billion) program to refinance local government debt by swapping existing hidden debts. The Standing Committee of the National People's Congress approved raising the ceiling on local government debt by 6 trillion yuan to 35.52 trillion yuan in 2024. Finance Minister Lan Fo'an stated that China aims to reduce hidden local government debt from 14.3 trillion yuan at the end of 2023 to 2.3 trillion yuan by 2028. The government will also arrange 800 billion yuan in annual new local government special bonds each year for five years, totaling 4 trillion yuan, to resolve local debt issues. The total resources allocated for tackling local debt issues amount to 10 trillion yuan ($1.4 trillion), which is expected to greatly alleviate pressure on local governments and strengthen economic vitality.