China launches $1.4 trillion debt refinancing program to support slowing economy

China has announced a $1.4 trillion debt refinancing program to address local government debt and support its slowing economy. This plan allows local governments to issue more bonds and raises the debt ceiling for the first time since 2015. Despite the size of the program, economists express doubts about its effectiveness in alleviating broader economic pressures, including potential declines in exports and ongoing structural debt issues. The offshore yuan weakened following the announcement, indicating market disappointment. Local government debt has surged, totaling about 14.3 trillion yuan as of late 2023. Analysts warn that while the debt swap offers some relief, it may not sufficiently address the underlying financial challenges facing China’s economy.