Chinese Premier Li Qiang led a State Council meeting last Friday focusing on bolstering measures for mitigating local government debt risks, emphasizing the importance of robust policy support and effective debt management strategies in line with high-quality development goals.

Data from the country's Ministry of Finance indicates that the total local government debt stood at 40.74 trillion yuan ($5.82 trillion) by the end of 2023, remaining within the limits approved by the National People's Congress, suggesting that debt risks are manageable and under control.

A commentary published by Economic Daily on Saturday pointed out that China's government debt is predominantly domestic. Given the country's economic and social stability, along with the strict regulation of new debt and a gradual reduction of the existing debt, China can effectively and systematically de-leverage, it said.

A crucial meeting held by the Political Bureau of the Communist Party of China Central Committee in July last year initiated a comprehensive debt resolution strategy, leading to over 20 provinces issuing approximately 1.4 trillion yuan in special refinancing bonds to ease repayment pressures and reduce interest burdens, according to China Business Network.

With the support of the People's Bank of China, the country's central bank, financial institutions have engaged in constructive negotiations to restructure existing debts through various measures, including debt rollovers and new loans to replace old ones.

Luo Zhiheng, chief economist at Yuekai Securities, emphasized that effective debt management involves more than just reducing the scale of debt. He contended that with prudent and efficient use, an increasing debt load can contribute positively to economic and social development.

"The overall growth of the economy can outstrip the increase in debt, thereby reducing debt risks amid high-quality development," Luo told China Business Network.