Description

This paper provides an in-depth analysis of the rapid growth in official local government (LG) and local government financing vehicle (LGFV) debt in China, with a focus on risks to macrofinancial stability and the challenges that have impeded past efforts to address official LG and LGFV debt problems. It proposes a detailed and carefully sequenced agenda to manage these debts, emphasizing the use of corporate insolvency frameworks, fiscal reforms, and preparing policy mechanisms for managing fiscal and financial stress. It aims to guide policymakers in mitigating the risks associated with restructuring LGFV debt and promoting sustainable growth, stressing the need for central government leadership in coordinating these efforts.

More publications in this series: Departmental Papers / Policy Papers