Kunming Scrambles to Pay Off $170 Million of Financing Vehicle Debt

By Wang Juanjuan, Cheng Siwei and Denise Jia

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Kunming’s outstanding local government debt was 223.17 billion yuan in 2022, excluding debt of local special-purpose financing vehicles.

A last-minute scramble this week by authorities in the southwest China city of Kunming to repay local government bonds totaling 1.2 billion yuan ($170 million) is adding to concerns about China’s $10 trillion hidden debt problem.

The bonds were issued by two local government financing vehicles (LGFVs) owned by the Kunming government. LGFVs are special purpose vehicles set up by local authorities to borrow money for funding infrastructure and public welfare spending. LGFV bonds are usually not allowed to be repaid from government fiscal revenue.

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