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MNI BRIEF: China Pre-Allocates CNY1.46 Trn In 2022 LSBs

MNI (Singapore)
BEIJING (MNI)

China has front-loaded CNY1.46 trillion of 2022 local government issuance as a special bond quota to be allocated in December, requiring local authorities to use the funds to kick-start feasible infrastructure projects in Q1 2022 and help prevent an economic slowdown, Xu Hongcai, assistant to the minister of finance, said at a briefing Thursday.

Funds should be spent on major projects that generate returns, including those in transportation, energy and environmental protection and areas with lower debt risks. Through-end 2020, China's overall local debt ratio (outstanding debts/fiscal strength) is 93.6%, lower than the international level between 100% to 120%, Xu noted.

China’s goal is to eliminate hidden debt nationwide, and all levels of governments should implement the directive while maintaining socioeconomic growth and preventing the pandemic, Xu said. Shanghai and Guangdong province, given their large economies and fiscal strength, will first strive to achieve zero-hidden debt and provide experience for other governments, he added.

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