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China Finance Minister Lan Fo’an told a press conference Friday the six trillion yuan debt limit would be made available over three years to help regional governments replace their so-called “hidden debt”.
China’s stimulus announcement was made at the conclusion of a five-day meeting by China’s top legislative body, the Standing Committee of the National People’s Congress. (Representative Photo: ANI)
China has approved a six trillion yuan ($837 billion) plan to bolster its ailing economy by allowing local governments to swap out their hidden debt, unveiling additional stimulus measures to counter a potentially volatile growth path marked by the impending return of Donald Trump to the White House.
Finance Minister Lan Fo’an told a press conference Friday the six trillion yuan debt limit would be made available over three years to help regional governments replace their so-called “hidden debt”. This kind of debt is normally owed by risky local government financing platforms that are backed by cities or provinces.
“Since the beginning of this year, affected by a variety of factors, the central and local fiscal revenues have fallen short of expectations,” he added.
The announcement was made at the conclusion of a five-day meeting by China’s top legislative body, the Standing Committee of the National People’s Congress.
Years of strict pandemic controls and a real estate crisis have drained local government coffers in China, leaving authorities across the country struggling with mountains of debt. The problem has gotten so extreme that some cities are now unable to provide basic services, and the risk of default is rising.
Lan revealed that, as of the end of 2023, China had an enormous hidden debt balance of 14.3 trillion yuan ($1.99 trillion). Officials aim to trim that amount to 2.3 trillion yuan ($320 billion) by 2028.
China’s gross domestic product (GDP) grew by just 4.6% in the three-month period from July to September, compared with a year ago. That was just slightly higher than the expectations of economists polled by Reuters, who had predicted expansion of 4.5%.
Still, at this pace of growth, there’s a risk Beijing may miss its growth target rate of around 5%. After a summer of dismal economic, leader Xi Jinping finally decided to go ahead with a much-needed stimulus package, mostly focused on monetary measures, in the last week of September.
Since then, economists have been expecting additional stimulus measures worth up to 10 trillion yuan ($1.4 trillion) to restore bullishness in the world’s second-largest economy.
