China's top legislature has approved a bill to raise the local government debt ceiling by six trillion yuan, more than 830 billion U.S. dollars, the strongest debt alleviation measures in recent years. The new policy is aimed at easing debt repayment strains for China's local governments. An official from China's top legislature, and the Chinese Finance Minister, briefed the media on the new policy on Friday afternoon in Beijing. Huang Yue has the details.

China's highly anticipated fiscal support policy has been announced with the aim to replace the existing hidden debt of local governments.

XU HONGCAI Deputy Director NPC Financial and Economic Affairs Committee "This increase, issued in the form of local government special-purpose bonds, will be rolled out over a period of three years. By the end of 2024, the special debt ceiling will rise from four trillion U.S. dollars to nearly five trillion U.S. dollars."

China's Finance Minister Lan Foan says from this year through 2028, over 110 billion U.S. dollars will be reallocated annually from local government budgets to swap out hidden debts. And this approach could cumulatively replace 560 billion U.S. dollars of hidden debts. Additionally, hidden debts related to shantytown reconstruction maturing in 2029 and beyond, totaling 280 billion U.S. dollars, will still be repaid according to the original contracts.

LAN FOAN Chinese Finance Minister "With these policies working in unison, the total hidden debts that need to be resolved by 2028 will be significantly reduced from nearly two trillion U.S. dollars to 230 billion U.S. dollars. As we estimated, local governments can fully manage debt resolution with these supportive policies."

The minister explains the plan comes amid a backdrop of economic strain, including lower-than-expected tax revenue and decreased land sales income. These factors have heightened the challenges the local governments face in managing their debt.

HUANG YUE Beijing "The finance minister said the proposed large-scale debt swap marks a fundamental shift in how China handles its local government debt: moving from reactive crisis management to proactive debt resolution."

It also focuses on comprehensive risk mitigation rather than isolated measures, seeking a balanced strategy that not only prevents financial risks, but also supports economic growth. Huang Yue, CGTN, Beijing.