China Underscores Commitment to Controlling Vast Government Debt
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The State Council, China’s cabinet, has for the first time issued a report about official government debt to the country’s top legislature, as Beijing steps up oversight and management of borrowing by local and central authorities.
Finance Minister Lan Foan presented the report at a Sept. 10 meeting of the standing committee of the National People’s Congress (NPC). As well as setting out details of government debt at central and local levels, the report also made a series of pledges including deepening reform of treasury debt management, promoting the gradual increase of treasury bond trading in the central bank’s open market operations, and enhancing the role of the treasury bond yield curve as an interest rate benchmark.
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- China’s State Council reported for the first time to NPC on central and local government debts totaling 70.7 trillion yuan ($9.98 trillion) as of end-2023.
- Report emphasizes financial discipline, reform of debt management, and stricter oversight of government borrowings.
- Debt-to-GDP ratio at 56.1%; revealing measures to manage hidden local government debts estimated by IMF at 60 trillion yuan.
- International Monetary Fund
- The International Monetary Fund (IMF) is an international organization that provides financial assistance and economic advice to its member countries. It estimated that local government financing vehicle (LGFV) debt in China amounted to 60 trillion yuan in 2023. The IMF's assessment highlights the growing risks to China's financial and fiscal health due to hidden debt primarily used for infrastructure investments.
- 2023：
- China issued 11.1 trillion yuan of sovereign debt, including 1 trillion yuan of treasury bonds in the fourth quarter to support disaster relief and construction.
- September 2023：
- Li Hongzhong, a vice chair of the NPC standing committee, told a discussion meeting that the legislature should 'accurately grasp' its position as a supervisor of government debt.
- By the end of 2023：
- Outstanding central government debt was 30 trillion yuan ($4.24 trillion), mostly domestic, while local government debt amounted to 40.7 trillion yuan.
- As of the end of 2023：
- China’s government debt-to-GDP ratio was 56.1%.
- September 10, 2024：
- Finance Minister Lan Foan presented the report at a meeting of the standing committee of the National People’s Congress (NPC).
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