- Move would raise “local govt debt limit by six trillion yuan”.
- Debt ceiling to be raised every year from 2024 to 2026.
- FM says total of $558 billion of “hidden debt can be replaced”.
BEIJING: China on Friday unveiled some of its most ambitious plans in years to lift local government debt and boost its economy, following a meeting of lawmakers eyeing the possibility of intensified trade tensions with US President-elect Donald Trump.
Local governments in China face a ballooning debt burden of $5.6 trillion, according to Beijing, raising worries about wider economic stability.
The International Monetary Fund (IMF) put the figure at $8.4 trillion last year.
Policymakers gathered in Beijing this week voted to swap their hidden debts — defined as borrowing for which a government is liable, but which is not disclosed to its citizens or to other creditors.
The move would raise “the local government debt limit by six trillion yuan, which will be used to replace existing hidden debts, freeing up space for local governments to better develop the economy and protect people’s livelihood,” state broadcaster CCTV said.
The move was taken after “fully considering the international and domestic development environment, ensuring the smooth operation of the economy and finance,” Finance Minister Lan Fo’an told a press conference in Beijing.
The debt ceiling will be raised every year from 2024 to 2026 “to support local governments in replacing all kinds of hidden debt”, he said.
A total of $558 billion of “hidden debt can be replaced”, Lan explained.
And $112 billion “will be arranged from new local government special bonds every year for five consecutive years to supplement government financial resources”, he added.
Lawmakers also approved a new energy law to promote “carbon neutrality” as Beijing moves ahead with its pledge to decarbonise its economy by 2060.
Taking stock of Trump
Officials were this week keeping close tabs on the US vote as they gathered in the Chinese capital for a meeting of the country’s top lawmaking body.
Trump promised during his campaign of punishing tariffs on Chinese goods that threaten further grief for the world’s second-largest economy, which is already grappling with a prolonged housing crisis and sluggish consumption.
Observers say Beijing could seek to cushion that blow with a long-awaited “bazooka stimulus” for the economy — though caution details might still take time.
This week’s meeting, originally scheduled for late October, was likely pushed back to allow “policymakers a chance to address a possible Trump win”, Chief Economist for Greater China at ING Lynn Song said.
Beijing began to unveil a raft of measures in September aimed at boosting economic activity, including rate cuts and the easing of some home purchasing restrictions, but analysts have bemoaned the lack of detail so far.
