China's Pace of Shutting Down Local Gov’t Financing Vehicles Speeds Up Amid Hidden Debt Cleanup

Detailed summary

The number of local government financing vehicles plunged 92 percent as of Sept. 30 from the end of March 2023, according to the State Council’s Report on Financial Work released…

(Yicai) Nov. 6 -- China’s campaign to rein in local authority debt risks is gathering pace, with local government financing vehicle closures accelerating in the first nine months of the year and most remaining platforms expected to be wound down by next year.The number of LGFVs nationwide as of Sept. 30 was down 92 percent from the end of March 2023, according to the latest report, according to the State Council’s Financial Work Report released yesterday.

Local government debt risks remain generally safe and controllable. According to finance ministry data, local debt stood at about CNY60.65 trillion (USD9 trillion) nationwide as of Sept. 30, within the debt ceiling approved by the National People’s Congress.The report showed clear progress in winding down LGFVs and reducing their debt, Luo Zhiheng, chief economist at Yuekai Securities, told Yicai.

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