China Approves $839-Bn Plan To Restructure Local Govt Debt

Beijing: Chinaon Friday approved a 6 trillion yuan ($839 billion) plan to help local governments refinance their mountains of debt, in the latest push to rev up growth in the world’s second largest economy.

The plan will be implemented over the next three years, Xu Hongcai, vice-chairman of the National People’s Congress’s financial and economic committee, said at a news conference Friday. Finance minister Lan Fo’an estimated that the hidden debt of local governments was 14.3 trillion yuan ($2 trillion) at the end of 2023. Hidden debt refers to debt that has not been disclosed publicly. Lan said 2 trillion yuan would be allocated each year from 2024 to 2026 to help local governments resolve their debts.

He estimated that the amount of hidden debt will drop to 2.3 trillion yuan ($320.9 billion) by the end of 2028. Officials also said Friday that the ceiling to issue special bonds will be raised to 35.52 trillion yuan ($4.96 billion) from 29.52 trillion yuan ($4.12 billion) for local governments.