China - November 12, 2024 China raises local government debt ceiling to ease repayment strains (Voice_over) China's highly anticipated fiscal support policy has been announced with the aim to replace the existing hidden debt of local governments. (Sound_bite) Xu Hongcai, Deputy Director, NPC Financial and Economic Affairs Committee: "This increase, issued in the form of local government special-purpose bonds, will be rolled out over a period of three years. By the end of 2024, the special debt ceiling will rise from 4 trillion US dollars to nearly 5 trillion US dollars." (Voice_over) China's Finance Minister Lan Foan says from this year through 2028, over 110 billion US dollars will be reallocated annually from local government budgets to swap out hidden debt. And this approach could cumulatively replace 560 billion US dollars of hidden debt. Additionally, hidden debts related to shanty town reconstruction maturing in 2029 and beyond, totaling 280 billion US dollars, will still be repaid according to the original contracts. (Sound_bite) Lan Foan, Chinese Finance Minister: "With these policies working in unison, the total hidden debt that needs to be resolved by 2028 will be significantly reduced from nearly 2 trillion US dollars to 230 billion US dollars. As we estimated, local governments can fully manage debt resolution with these supportive policies." (Voice_over) The minister explains the plan comes amid a backdrop of economic strain, including lower-than-expected tax revenue and decreased land sales income. These factors have heightened the challenges the local government faces in managing their debt. (Stand_up) Huang Yue, Reporter "The finance minister said the proposed large-scale debt swap marks a fundamental shift in how China handles its local government debt: moving from reactive crisis management to proactive debt resolution. It also focuses on comprehensive risk mitigation rather than isolated measures, seeking a balanced strategy that not only prevents financial risks, but also supports economic growth." [Restriction: No access Chinese mainland]