FINANCE

Analysis: Can Monetizing State Assets Ease China’s Local Debt Strain?

Published: Feb. 24, 2026 6:41 p.m. GMT+8

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Chinese local governments are turning to monetizing state-owned assets and resources as part of debt-resolution efforts — a sign that liquidity pressure remains even as official moves have reduced risks tied to hidden debt.

The approach, publicly highlighted by Hubei province in October, seeks to unlock value from dormant state holdings. These range from land and infrastructure to public-sector assets and data. The proceeds can help ease funding pressure, including among local government financing vehicles that continue to face debt risks.

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Chinese local governments are monetizing state-owned assets, like land and infrastructure, to address debt pressures.
Local state-owned enterprises held 278.1 trillion yuan ($39 trillion) in assets at the end of 2024, with Hubei revitalizing over 300 billion yuan worth in 2023.
Asset securitization provides funding but only defers liabilities, with risks from unclear ownership and asset performance.

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