CX Daily: Local Governments Struggle To Tackle Mountain Of Hidden Debt

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The Politburo has vowed to formulate and implement a comprehensive strategy to resolve local government hidden debts, which have accumulated to as much as 70 trillion yuan by some estimates. Photo: AI

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In Depth: Local governments struggle to tackle mountain of hidden debt

Local governments across China have been rushing to implement a debt-resolution plan outlined by the Politburo in July that involves defusing the debt risks of their financing vehicles and bringing hidden liabilities out of the shadows and on to their official books.

Although many regions have successfully issued special refinancing bonds to replace some of their hidden borrowings, overall, progress on debt resolution has been slow amid uncertainty over the viability of many local government financing vehicles (LGFVs) and concern among banks that they will be lumbered with debt that won’t be repaid, pushing their nonperforming loans higher and risking their ability to meet regulatory targets.