The Fort Worth Press - China unveils sweeping local govt debt swap to lift ailing economy

USD -
AED 3.67298
AFN 68.117769
ALL 91.052358
AMD 387.369893
ANG 1.797501
AOA 912.501041
ARS 993.726985
AUD 1.508921
AWG 1.8025
AZN 1.691317
BAM 1.813092
BBD 2.013776
BDT 119.188661
BGN 1.81501
BHD 0.376986
BIF 2944.322901
BMD 1
BND 1.323235
BOB 6.916595
BRL 5.732884
BSD 0.997386
BTN 84.157539
BWP 13.316709
BYN 3.264054
BYR 19600
BZD 2.010438
CAD 1.38998
CDF 2864.999955
CHF 0.871065
CLF 0.034815
CLP 960.649702
CNY 7.163603
CNH 7.119295
COP 4323.25
CRC 509.585435
CUC 1
CUP 26.5
CVE 102.220265
CZK 23.3794
DJF 177.608647
DKK 6.91722
DOP 59.959953
DZD 133.477986
EGP 49.307994
ERN 15
ETB 122.777922
EUR 0.927605
FJD 2.262987
FKP 0.765169
GBP 0.771506
GEL 2.725012
GGP 0.765169
GHS 16.357653
GIP 0.765169
GMD 71.520072
GNF 8599.080392
GTQ 7.697121
GYD 208.667841
HKD 7.77395
HNL 25.162229
HRK 6.88903
HTG 131.211065
HUF 376.838045
IDR 15588.05
ILS 3.73345
IMP 0.765169
INR 84.3722
IQD 1306.572726
IRR 42105.000263
ISK 137.891591
JEP 0.765169
JMD 157.844482
JOD 0.709102
JPY 152.413497
KES 128.99993
KGS 86.19682
KHR 4052.024622
KMF 455.949643
KPW 899.999774
KRW 1386.835019
KWD 0.30659
KYD 0.831186
KZT 490.256791
LAK 21891.686443
LBP 89645.774041
LKR 291.836621
LRD 189.503252
LSL 17.435108
LTL 2.95274
LVL 0.604889
LYD 4.832579
MAD 9.863819
MDL 17.887867
MGA 4599.896173
MKD 57.008787
MMK 3247.960992
MNT 3398.000028
MOP 7.984797
MRU 39.735983
MUR 46.395715
MVR 15.409884
MWK 1729.457134
MXN 19.927105
MYR 4.382505
MZN 63.90499
NAD 17.435432
NGN 1681.529964
NIO 36.700905
NOK 10.916465
NPR 134.651253
NZD 1.667375
OMR 0.385047
PAB 0.997395
PEN 3.769908
PGK 4.002892
PHP 58.3195
PKR 277.198439
PLN 4.006622
PYG 7741.582616
QAR 3.635209
RON 4.614203
RSD 108.503014
RUB 97.674516
RWF 1366.897805
SAR 3.756028
SBD 8.347827
SCR 13.345075
SDG 601.496439
SEK 10.730875
SGD 1.322125
SHP 0.765169
SLE 22.790288
SLL 20969.496802
SOS 570.02744
SRD 34.955034
STD 20697.981008
SVC 8.72705
SYP 2512.530268
SZL 17.429917
THB 34.044983
TJS 10.602244
TMT 3.5
TND 3.103786
TOP 2.342098
TRY 34.3529
TTD 6.765426
TWD 32.138037
TZS 2670.00011
UAH 41.234426
UGX 3660.888106
UYU 41.466004
UZS 12775.563178
VEF 3622552.534434
VES 43.463205
VND 25275
VUV 118.722039
WST 2.801184
XAF 608.08829
XAG 0.029645
XAU 0.000367
XCD 2.70255
XDR 0.747831
XOF 608.08829
XPF 110.559006
YER 249.849426
ZAR 17.51301
ZMK 9001.20246
ZMW 27.029257
ZWL 321.999592
  • RBGPF

    0.0100

    61.4

    +0.02%

  • CMSC

    0.1700

    24.68

    +0.69%

  • RYCEF

    -0.0500

    7.16

    -0.7%

  • NGG

    0.1800

    64.3

    +0.28%

  • SCS

    0.0200

    13.08

    +0.15%

  • BP

    0.1300

    30.29

    +0.43%

  • RELX

    -0.0500

    47.66

    -0.1%

  • RIO

    2.1400

    67.47

    +3.17%

  • GSK

    0.7600

    36.66

    +2.07%

  • BTI

    -0.2400

    35.4

    -0.68%

  • CMSD

    0.0400

    24.89

    +0.16%

  • AZN

    0.8400

    64.69

    +1.3%

  • JRI

    0.1200

    13.37

    +0.9%

  • VOD

    0.0100

    9.32

    +0.11%

  • BCC

    -0.9100

    140.85

    -0.65%

  • BCE

    -0.6700

    28.07

    -2.39%

China unveils sweeping local govt debt swap to lift ailing economy
China unveils sweeping local govt debt swap to lift ailing economy / Photo: © AFP

China unveils sweeping local govt debt swap to lift ailing economy

China on Friday unveiled some of its most ambitious plans in years to lift local government debt and boost its economy, following a meeting of lawmakers eyeing the possibility of intensified trade tensions with US president-elect Donald Trump.

Text size:

Local governments in China face a ballooning debt burden of $5.6 trillion, according to Beijing, raising worries about wider economic stability.

The International Monetary Fund (IMF) put the figure at $8.4 trillion last year.

Policymakers gathered in Beijing this week voted to swap their hidden debts -- defined as borrowing for which a government is liable, but which is not disclosed to its citizens or to other creditors.

The move would raise "the local government debt limit by six trillion yuan, which will be used to replace existing hidden debts, freeing up space for local governments to better develop the economy and protect people's livelihood," state broadcaster CCTV said.

The move was taken after "fully considering the international and domestic development environment, ensuring the smooth operation of the economy and finance," finance minister Lan Fo'an told a press conference in Beijing.

"Since the beginning of this year, some new situations and problems have arisen in economic operations," he admitted.

The debt ceiling will be raised every year from 2024 to 2026 "to support local governments in replacing all kinds of hidden debt", he said.

A total of $558 billion of "hidden debt can be replaced", Lan explained.

And $112 billion "will be arranged from new local government special bonds every year for five consecutive years to supplement government financial resources", he added.

Lawmakers also approved a new energy law to promote carbon neutrality" as Beijing moves ahead with its pledge to decarbonise its economy by 2060.

Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management said the debt swap "is an important policy measure which helps local government to alleviate their debt burden".

"This is expected by the market, but nonetheless the confirmation of such policy is positive," he said.

- Taking stock of Trump -

Officials were this week keeping close tabs on the US vote as they gathered in the Chinese capital for a meeting of the country's top lawmaking body.

Trump promised during his campaign of punishing tariffs on Chinese goods that threaten further grief for the world's second-largest economy, which is already grappling with a prolonged housing crisis and sluggish consumption.

Observers say Beijing could seek to cushion that blow with a long-awaited "bazooka stimulus" for the economy -- though caution details might still take time.

This week's meeting, originally scheduled for late October, was likely pushed back to allow "policymakers a chance to address a possible Trump win", Lynn Song, chief economist for Greater China at ING, said.

"In our view, the odds for a larger policy support package will rise somewhat with a Trump victory," he added.

Trump's victory is "not necessarily bad for China as this may 'pressure' Beijing for a bigger stimulus", Qi Wang, CIO of UOB Kay Hian Wealth Management, said on X.

Beijing began to unveil a raft of measures in September aimed at boosting economic activity, including rate cuts and the easing of some home purchasing restrictions, but analysts have bemoaned the lack of detail so far.

- 'Turning point' -

Trump's re-election provides a need for greater urgency, experts say, though caution may still prevail as officials try to avoid piling on more government debt.

"Any potential stimulus size may be bigger, but so is the pressure," Gary Ng, senior economist at Natixis, said.

"The market may still not get the economic boosters it wants," he warned.

In Beijing on Friday, people acknowledged recent woes but expressed cautious optimism about the future of the economy.

Han Xi, a 32-year-old man from Shanxi province in northern China, began a new auditing job in Beijing this week after resigning from his previous company in April.

"I have sent out resumes during this period, but you can see it takes more than half a year to get a new job," Han told AFP, adding that "many companies are laying off employees right now".

"But from a macroeconomic perspective, I'm generally optimistic," he added.

"Even though we're still in a downturn cycle, I think we are close to the turning point, though we haven't quite reached it yet."

K.Ibarra--TFWP