(8 Nov 2024)
RESTRICTION SUMMARY:
ASSOCIATED PRESS
Beijing, China – 8 November 2024
1. Wide of briefing
2. SOUNDBITE (Mandarin) Lan Fo’an, Chinese Minister of Finance:
“Since the beginning of this year, affected by factors such as changes in the external environment and insufficient domestic demand, some new situations and problems have emerged in economic operations. Tax revenue has been lower than expected, revenue from the sale of land-use rights has dropped significantly, and it has become more difficult to resolve hidden debts in various places.”
3. Wide of briefing
4. SOUNDBITE (Mandarin) Lan Fo’an, Chinese Minister of Finance:
“First, this will free up resources originally used to resolve debt and use them to promote development and improve people’s livelihood instead. Secondly, this will free up the policy space, which was previously subject to the pressure of debt reduction, to provide greater support for areas such as investment, consumption and technological innovation, and promote stable economic growth and structural adjustment.”
5. Mid of reporters
6. SOUNDBITE (Mandarin) Lan Fo’an, Chinese Minister of Finance:
“By 2028, the total amount of hidden debt that local governments need to digest will drop significantly from 14.3 trillion yuan to 2.3 trillion yuan, and the average annual amount of debt digesting will drop from 2.86 trillion yuan to 460 billion yuan, less than one sixth of the original amount. The pressure to resolve debt will be greatly reduced.”
7. Mid of reporters
8. SOUNDBITE (Mandarin) Lan Fo’an, Chinese Minister of Finance:
“While resolving existing debt risks, we must resolutely curb new hidden debts to prevent and resolve local government debt risks. The Ministry of Finance will work with relevant departments to continue to maintain a ‘zero-tolerance’ posture in intense supervision and handle new hidden debts and hold them accountable once discovered.”
9. Wide of briefing
STORYLINE:
China on Friday approved a 6 trillion yuan ($839 billion) plan to help local governments refinance their mountains of debt, in the latest push to rev up growth in the world’s second largest economy.
The plan will be implemented over the next three years, Xu Hongcai, vice-chairman of the National People’s Congress’s financial and economic committee, said at a news conference Friday.
Chinese finance minister Lan Fo’an estimated that the hidden debt of local governments was 14.3 trillion yuan ($2 trillion) at the end of 2023. Hidden debt refers to debt that has not been disclosed publicly.
Lan said 2 trillion yuan would be allocated each year from 2024 to 2026 to help local governments resolve their debts.
He estimated that the amount of hidden debt will drop to 2.3 trillion yuan ($320.9 billion) by the end of 2028.
Officials also said Friday that the ceiling to issue special bonds will be raised to 35.52 trillion yuan ($4.96 billion) from 29.52 trillion yuan ($4.12 billion) for local governments.
Lan said that the implementation of such a large-scale replacement measure indicates a “fundamental shift” in China’s approach to debt restructuring and said that China’s government debt risk was “controllable.”
He said the government would maintain a “zero-tolerance” attitude against new hidden debts.
The latest policy will reduce pressure of local governments and create space for economic growth, Lan said.
Analysts have called for bold, multi-trillion-yuan measures to reinvigorate the world’s second largest economy, which has yet to bounce back fully from the COVID-19 pandemic.
The economy has shown signs of life in the past two months.
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