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E-mail China.org.cn, February 17, 2025
Red Star News:
My question is, two months ago, the Standing Committee of the National People's Congress approved a 6 trillion yuan debt resolution plan. What is the current progress under the phased implementation plan? Additionally, what are the next steps for advancing the implementation of the debt restructuring plan? Thank you.
Wang Jianfan:
First, I want to thank you for your interest in this policy. On Nov. 8, 2024, upon the Standing Committee of the National People's Congress's (NPC) approval of a 6 trillion yuan debt swap increase, we provided a detailed explanation of the policy rationale and implementation plans during a press conference held by the General Office of the NPC Standing Committee. Afterwards, we have coordinated with relevant parties to accelerate implementation and ensure the policy achieves its intended outcomes. Let me outline the key initiatives we have implemented.
On the one hand, we have moved swiftly to implement these policies so that they can bring benefits as soon as possible. On Nov. 8, the NPC Standing Committee approved the motion. On Nov. 9, after expedited approval procedures, we allocated the debt quotas to regions and directed them to step up efforts in issuing and utilizing funds. As Mr. Liao just explained, the 2 trillion yuan in replacement bonds allocated for 2024 was fully issued by Dec. 18, 2024, and most regions have now completed utilizing these funds. We've now entered 2025, and according to the motion approved by the NPC Standing Committee, an additional 2 trillion yuan quota is available for this year. Various regions have already begun the issuance process.
On the other hand, we have enhanced oversight, ensured accountability and strictly prevented any deviation in policy implementation. We have directed localities to properly utilize these policies, enforced strict discipline in debt replacement procedures, and prohibited bond fund misappropriation. This ensures these beneficial measures achieve their intended outcomes while preventing any misuse or wasting of these supportive funds.
The debt replacement policies are now showing positive results in easing financial constraints and reducing burdens. Various localities have seen their average debt replacement costs decrease by more than 2 percentage points, with some regions experiencing reductions exceeding 2.5 percentage points, significantly easing their principal and interest payment burdens. Some regions have prioritized replacing maturing open market bonds and non-standardized debts involving many stakeholders, which has significantly improved their local financial environment. At the same time, the implementation of debt replacement policies has created additional space for localities to boost domestic demand. With improved liquidity in local funding channels, governments can better support investment, consumption and technological innovation. This promotes stable economic growth and structural optimization while strengthening long-term development potential.
Moving forward, the MOF will continue working with relevant parties to ensure thorough policy implementation, following the decisions and arrangements of the CPC Central Committee and the State Council.
First, we will continue strengthening guidance to localities and ensure thorough implementation of debt replacement requirements. We will guide localities to fully and effectively utilize central government support policies, promptly conduct research and address new issues emerging during the debt resolution process, and promote successful local practices for others to learn from. We have established dedicated platforms to share successful practices for accelerating the resolution of existing hidden debts.
Second, we will implement comprehensive oversight throughout the bond funding process and ensure compliant use. We'll guide localities to establish ledgers for existing hidden debt replacement, maintain complete and accurate records of bond issuance, utilization and debt service, and ensure all funds are subject to distinct account management, separate accounting and closed-loop operation.
Third, we must firmly prevent the accumulation of new hidden debts while working to fully resolve existing obligations. We'll maintain a "zero tolerance" stance through tough oversight, strengthen interdepartmental regulatory coordination, and seriously address issues such as illegal borrowing and fraudulent hidden debt resolution. We will accelerate the reform and transformation of financing platforms and resolutely block illegal and irregular local borrowing channels to promote sustainable development. Thank you.
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