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Chinese Finance Minister Lan Fuan announced plans to significantly increase the debt limit and intensify efforts to help local governments manage and resolve debt risks.
The initiative marks the strongest measure in recent years to support debt reduction. The government also plans to issue special bonds aimed at recapitalizing large state-owned commercial banks.
On October 12, the State Council Information Office held a press conference with Finance Minister Lan Fuan and other officials. The focus of the meeting was “strengthening countercyclical adjustment of fiscal policy and promoting high-quality economic development.” Lan Fuan provided key information on China’s fiscal policy and answered reporters’ questions.
Addressing local government debt risks is crucial to the sustainable development of China's financial system, Lan Fuan said. Since 2015, the Ministry of Finance has been issuing local bonds to replace existing government debt in cooperation with relevant departments. This initiative has successfully brought cities such as Beijing, Shanghai and Guangdong to zero implicit debt.
*This is not investment advice.