China_s_New_Debt_Plan_Set_to_Boost_Economic_Development

China’s New Debt Plan Set to Boost Economic Development

China’s Standing Committee of the 14th National People’s Congress (NPC) concluded its 12th session on Friday in Beijing, approving a significant proposal by the State Council to increase local government debt limits. This move aims to replace existing hidden debts and is seen as the official launch of a new round of “debt risk defusing” measures in the country.

Finance Minister Lan Fo’an had previously indicated at a press conference on October 12 a plan to significantly increase debt limits to address local governments’ hidden debts. The proposal suggests raising the local government debt limit by 6 trillion yuan ($822 billion). Under this arrangement, the special debt limit for local governments will increase from 29.52 trillion yuan to 35.52 trillion yuan by the end of 2024.

Local governments are key drivers of China’s economic development and reform. By expanding their debt limits, the government aims to enhance the vitality of local developments and provide a crucial measure for achieving the next-phase targets of high-quality economic growth.

The move is expected to significantly bolster local economies, enabling increased investment in infrastructure, public services, and other critical sectors. It reflects China’s commitment to maintaining economic stability and promoting sustainable growth amid global economic uncertainties.

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