On October 18, 2023, in Beijing, China, to commemorate the tenth anniversary of the “Belt and Road” initiative, before the opening ceremony of the “Belt and Road” Summit Forum, a Chinese flag flew on the roof of the Great Hall of the People.
Sue Edgar | Reuters
BEIJING – A closely watched meeting of China’s National People’s Congress Standing Committee on Monday considered a proposal to increase local government debt limits. official media.
The new debt will be used to replace hidden debt, the report said, noting that Finance Minister Lanfouyan spoke about the plan at the meeting.
Lan said at a press conference last month that raising the local debt limit was in the pipeline. China’s local governments, which have historically been responsible for most spending on public services, have been in financial trouble as revenue from land sales to developers falls.
Lu Ting, chief China economist at Nomura Securities, said that China has about 50 trillion yuan to 60 trillion yuan (about 7 trillion to 8.45 trillion U.S. dollars) of outstanding hidden debt.
He estimated in a note on Friday that about 10 trillion yuan in additional debt lines may be approved over the next few years to replace some of the hidden debt.
“If China’s economy faces greater challenges, Beijing may eventually increase the debt swap to 15 trillion yuan,” Lu said.
China’s National People’s Congress Standing Committee will meet this week and is widely expected to approve further fiscal support for the country’s slowing economy. Committee Chairman Zhao Leji will chair the meeting, which is scheduled to end on Friday.
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