China Local Debt Repayments Surge On More Special Bond Issues

China should not significantly expand the quota of local government special bonds as local authorities have suffered increasing pressures from debt repayments, Caixin Magazine reported citing experts. China's local government debt ratio - local government outstanding debt/ total fiscal revenue - is approaching or has reached the international red line of 120%, even though China government debt ratio - national outstanding debt/GDP - is lower than 60%, it said. The surging issuance of local government special bonds in recent years has increased debt risk, particularly for some governments in the middle and west regions. New debt interest repayments reached a record high of CNY192 billion last year, even though rates on debt issues dropped to 3.02% in 2022 from 3.89% in 2018.