China tries to defuse local debt risk with $200bn refinancing tool

Latest support measure meant to help roll over hidden debts

20230901N Chongqing project

A financing vehicle-funded tourism facility in Chongqing. (Photo by Shunsuke Tabeta)

IORI KAWATE, Nikkei staff writer

BEIJING -- China plans to let some local governments tap a new bond issuance scheme to help them roll over debts held by struggling infrastructure developers.

The move represents China's latest effort to defuse the risks associated with local governments' off-balance-sheet debt. Much of this hidden debt stems from so-called local government financing vehicles (LGFVs) set up to pay for roads and other projects.

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