ECONOMY

China Seeks Stronger Policies for Local Government Debt Cleanup

Published: May. 12, 2026 5:41 p.m. GMT+8

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China’s cabinet called for stronger policy support to help local governments complete off-balance-sheet debt cleanup before a mid-2027 deadline, as Beijing seeks to contain local debt risks.

The call came during a State Council meeting on Saturday. Authorities launched a sweeping debt-resolution program in 2023, later expanding it with a 10 trillion yuan ($1.4 trillion) package aimed at reducing off-balance-sheet local government debt burdens.

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China's cabinet urged stronger policy support for local governments to complete off-balance-sheet debt cleanup by mid-2027.
2023 debt-resolution program expanded with 10 trillion yuan ($1.4 trillion) package targeting LGFV liabilities.
Efforts focus on restructuring bank loans, bonds, non-standard debt via swaps, extensions, rate cuts; markets await more measures.

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