China's Ministry of Finance arranges to use 550 billion yuan local government debt balance limit

China News Service, Beijing, October 9 (Reporter Zhao Jianhua) China's Ministry of Finance recently arranged to use a local government debt balance limit of 550 billion yuan (RMB, the same below) to improve counties and districts' general public budget security capabilities and support local governments to expand effective investment.

The Ministry of Finance introduced on the 9th that of the 550 billion yuan local government debt balance limit issued to local governments, 300 billion yuan of the general debt balance limit will be allocated to counties and districts for use specifically to improve the general public budget support capabilities of counties and districts; the special debt balance limit of 250 billion yuan will be allocated to all counties and districts in the fourth quarter of this year. Areas with actual project funding needs will be tilted towards economically large provinces to give priority to ensuring the funding needs of projects under construction. New projects will focus on key areas such as the construction of the "six networks" (water network, new power grid, computing power network, new generation communication network, urban underground pipe network, and logistics network) to effectively play the driving role of government investment.

The Ministry of Finance stated that it will guide and urge various localities to better connect project reserves and bond issuance, speed up the pace of issuance, smooth the allocation chain, form a physical workload as soon as possible, and promote the early implementation and early effect of policies.

According to the report on the implementation of China's fiscal policy for the first half of 2026 released by the Ministry of Finance on the 9th, in the first half of the year, a total of 2.07 trillion yuan of new special bonds were issued in various places to support more than 17,000 construction projects, of which more than 170 billion yuan was used as project capital, giving better play to the leveraging effect of government investment. Existing implicit debt risks are effectively mitigated. As of the end of July, 1.73 trillion yuan of replacement bonds had been issued in various places, completing 86.7% of the 2 trillion yuan quota for 2026. Guide local governments to speed up the resolution of existing hidden debts of financing platforms, clarify the rights and responsibilities of governments and enterprises in accordance with laws and regulations, and speed up the divestment of government financing functions of financing platforms. Cooperate with financial management departments to optimize debt risk resolution policies for financial support financing platforms, and guide financial institutions to reduce liquidity risks and interest burdens of financing platforms through debt restructuring and other methods.