- The move would raise “the maximum local government debt by six trillion yuan.”
- The debt ceiling is scheduled to be raised every year from 2024 to 2026.
- A total of $558 billion of “hidden debt could be redeemed,” says the Secretary of State.
BEIJING: China on Friday unveiled some of its most ambitious plans in years to raise local government debt and boost its economy, following a meeting of lawmakers eyeing the possibility of escalating trade tensions with US President-elect Donald Trump.
Local governments in China face a ballooning debt burden of up to $5.6 trillion, according to Beijing, raising concerns about broader economic stability.
The International Monetary Fund estimated the figure at about $8.4 trillion last year.
Policymakers meeting in Beijing this week voted to swap their hidden debt — defined as borrowing for which the government is responsible, but which is not disclosed to its citizens or other creditors.
The move would raise “the maximum debt of local governments by six trillion yuan, which will be used to replace existing hidden debts, making room for local governments to better develop the economy and protect people’s livelihoods,” the state radio reported. CCTV He said.
Finance Minister Lan Fuan said at a press conference in Beijing that the move was taken after “fully taking into account the international and domestic development environment, and ensuring the smooth operation of the economy and finance.”
He added that the debt ceiling will be raised every year from 2024 to 2026 “to support local governments in replacing all types of hidden debt.”
Lan explained that a total of $558 billion of “hidden debt can be replaced.”
He added that $112 billion “of new local government special bonds will be arranged each year for five consecutive years to supplement government finances.”
Lawmakers also approved a new energy law to promote “carbon neutrality” as Beijing presses ahead with its pledge to decarbonize its economy by 2060.
Trump’s assessment
Officials were closely monitoring the US vote this week as they gathered in the Chinese capital for a meeting of the country’s top legislative body.
During his election campaign, Trump pledged to impose tariffs on Chinese goods, which threatens to further distress the world’s second-largest economy, which is already suffering from a long-term housing crisis and slowing consumption.
Observers say Beijing may seek to cushion that blow with a long-awaited “bazooka stimulus” for the economy — though details of the caution may take some time to be worked out.
ING’s chief economist for Greater China Lin Song said this week’s meeting, which was scheduled for late October, was likely postponed to provide “an opportunity for policymakers to address a potential Trump win.”
Beijing began unveiling a raft of measures in September aimed at boosting economic activity, including interest rate cuts and easing some restrictions on home purchases, but analysts lament the lack of details yet.