China’s Local Bonds Surpass CNY10 Trillion Milestone for the First Time

On December 2nd, the annual issuance of local government bonds in China surpassed CNY10 trillion (USD 1.41 trillion) for the first time, all while remaining within the legal debt limit.

As of December 2nd, regional debt issuance reached approximately CNY10.1 trillion, according to data from an independent analytics platform.

Wen Laicheng, a professor at the Central University of Finance and Economics, remarked that crossing the CNY10 trillion mark is a significant milestone. He further pointed out that the issuance of local government bonds has been expanding rapidly in recent years. The current total of local government debt has already exceeded CNY50 trillion but stays within the statutory cap, indicating that the overall debt levels are manageable and under control.

Nonetheless, Wen emphasized the importance of remaining vigilant against the risks posed by very rapid debt growth, which could threaten the fiscal stability of local governments over the medium and long term.

According to the finance ministry, as of the end of September, China’s local government debt stood at roughly CNY53.7 trillion, comfortably below the authorized ceiling of CNY57.9 trillion.

Prior to 2015, local governments were not authorized to issue debt under the Budget Law. As a result, the finance ministry issued only a limited number of government bonds on their behalf. Later, some regions were permitted to pilot self-issuance and repayment schemes, which kept overall bond issuance relatively modest, often in the hundreds of billions of yuan. For example, in 2014, local government bond issuance totaled just CNY400 billion.

The revised Budget Law implemented in 2015 granted provincial-level governments the authority to raise funds through bond issuance. Since then, the overall volume of local government bonds has generally trended upward, with fluctuations. In 2025, to stabilize investments and further address hidden local debt issues, bond issuance crossed CNY10 trillion for the first time.

Looking forward, Wen suggested that growth in local government bond issuance should be carefully controlled. He also recommended strengthening performance management to ensure more efficient use of bond funds and establishing long-term mechanisms to prevent and manage potential debt risks.