According to Finance.sina: In a press conference held by the State Council Information Office on October 12, 2024, Minister of Finance Lan Fuan introduced new fiscal measures aimed at addressing local government debt risks and strengthening China’s economic stability.

Key Announcements:

Planned Debt Limit Increase to Replace Hidden Debts
The Ministry of Finance announced plans to increase the debt limit on a large scale to replace existing hidden local government debts. This measure aims to reduce debt pressure on local governments and free up financial resources to support economic growth and stabilize "three guarantees" programs (guaranteeing wages, grassroots operations, and basic livelihoods).

  • 2.2 trillion yuan in local government bonds has already been allocated to help clear overdue corporate accounts and address existing debts.

  • At the end of 2023, the implicit debt included in the national debt platform is expected to be 50% lower than its 2018 levels.

Debt Management and Treasury Fund Support
Minister Lan emphasized improved treasury fund scheduling to ensure financial support for regions under fiscal stress.

  • The central government will advance fund allocations to areas facing tight finances.

  • Provincial financial departments will be tasked with monitoring treasury funds to enhance the financial capacity at the grassroots level.

Stability of Grassroots "Three Guarantees"
The "three guarantees" – people's livelihood, wages, and grassroots operations – are stable overall but face challenges in some regions due to slow fiscal revenue growth and local government debt burdens. In 2023, these guarantees accounted for approximately 80% of local financial resources.

  • A long-term mechanism for ensuring the sustainability of the three guarantees will be developed.

  • A list of expenditures for the three guarantees will be created to ensure proper allocation at the grassroots level.

Debt Relief Measures
The Ministry of Finance outlined five key measures to further manage local government debt:

  • Strengthening responsibilities across all levels of government.

  • Increasing central transfer payments to local governments to ease financial pressure.

  • Issuing 400 billion yuan to help local governments meet financial obligations.

  • Replacing local government debts with increased bond issuance.

  • Dynamic monitoring of local government revenue and expenditures.