The Chinese government has announced a five-year, 10 trillion yuan ($1.4 trillion) plan to help local governments manage debt and spur economic growth:
Special bonds: 800 billion yuan will be issued every year until 2026, for a total of 4 trillion yuan.
Reduction of "hidden" debt: the package aims to reduce the "hidden" debt of local governments, bringing it from 14.3 trillion yuan in 2023 to 2.3 trillion by 2028.
Estimated savings: Local governments are expected to save 300 billion yuan per year in interest (Nomura estimate). These measures aim to support regional finances, weakened by the crisis in the real estate sector and by expenses related to the Covid-19 pandemic. Beijing signals that, if necessary, further fiscal and monetary measures could come in 2024 to stabilize the economy.