China launches plan to swap six trillion yuan of local government hidden debt

hindustantimes.com

China has announced a new plan to address local government debt, swapping six trillion yuan ($840 billion) of hidden debt for official loans with better terms. This aims to reduce austerity measures that have worsened the economic downturn. Local governments have accumulated significant hidden debt through local government financing vehicles, which are less regulated. With infrastructure needs declining and the real estate market struggling, these debts pose a risk of default. The new plan will increase the local government debt ceiling annually from 2024 to 2026, allowing for the replacement of $558 billion in hidden debt. Analysts suggest that the plan's effectiveness depends on how the funds are utilized.


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