NPC Approves Proposal to Increase Local Government Debt Limit by 6 Trillion Yuan
China will invest resources equivalent to 2,000 trillion Korean won over the next five years to address the issue of local government debt.
Lan Foan, China's Minister of Finance, announced at a press conference following the 12th meeting of the Standing Committee of the 14th National People's Congress (NPC) on the 8th that the NPC approved a plan to increase the local government debt limit by 6 trillion yuan (approximately 1,162 trillion Korean won).
He added that China will allocate 800 billion yuan (approximately 155 trillion Korean won) annually from special local government bonds over the next five years starting this year, using a total of 4 trillion yuan (approximately 775 trillion Korean won) to refinance the local governments' "hidden debt."
Minister Lan explained, "Adding the 6 trillion yuan debt limit increase approved by this NPC, the resources to resolve local debt will rise to 10 trillion yuan (approximately 1,937 trillion Korean won)."
He further stated, "If policy synergies occur, the total amount of hidden debt that needs to be resolved by local governments before 2028 will decrease significantly from 14.3 trillion yuan (approximately 2,770 trillion Korean won) to 2.3 trillion yuan (approximately 445 trillion Korean won), greatly alleviating debt pressure."
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