FINANCE

China Says 82% of Local Financing Vehicles Phased Out in Debt Cleanup

Published: Mar. 6, 2026 2:15 a.m. GMT+8

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China reports major progress in its effort to rein in local government debt. Photo: VCG

China has made significant progress in containing local government debt risks, with more than 82% of local government financing vehicles (LGFVs) phased out and their outstanding operational financial debt reduced by more than 74%, according to a government report submitted Tuesday.

The update on a nationwide debt-resolution campaign launched in 2024 was included in a report on the national economic and social development plan delivered for review at the fourth session of the 14th National People’s Congress.

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China has phased out over 82% of local government financing vehicles (LGFVs) and cut outstanding LGFV debt by more than 74%.
In 2025, China issued 2 trillion yuan in refinancing bonds and 800 billion yuan in special-purpose bonds to manage debt; similar amounts are planned for 2026.
The next phase of debt resolution is more difficult, requiring central government and private sector support as easy swaps have been mostly completed.

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What Happened When

2024：: China launched a nationwide debt-resolution campaign.

2025：: Debt resolution took priority, reflected in a sharp decline in the share of new special-purpose bonds allocated for project investment.

End of September 2025：: The number of LGFVs and their outstanding operational debt had fallen by 71% and 62%, respectively, from their levels in March 2023.

Late October 2025：: Central bank Governor Pan Gongsheng reported to the Standing Committee of the National People’s Congress that as of the end of September 2025, the number of LGFVs and their outstanding operational debt had fallen by 71% and 62%, respectively, from their levels in March 2023.

2026-03-03：: A government report was submitted stating that more than 82% of local government financing vehicles (LGFVs) had been phased out and their outstanding operational financial debt reduced by more than 74%.

AI generated, for reference only