The Ministry of Finance of China announces a large-scale debt reduction plan.

Minister of Finance Lan Fuan announced that a significant increase in debt limits will be made in one go to replace local governments' existing hidden debts. This is the most substantial measure to support debt resolution in recent years.

Historically, the Ministry of Finance has led three major debt resolution actions:

1. 2015-2018: Issued about 12.2 trillion in replacement bonds to replace existing government debts.
2. 2019: Issued 157.9 billion in replacement bonds to replace hidden debts.
3. 2020-2022: Issued 1.13 trillion in special refinancing bonds to initiate the elimination of hidden debts.

The fourth round of debt resolution is underway, with 3.4 trillion in local government bond quotas allocated for debt resolution in 2023-2024.

My Insight: The scale of debt resolution is enormous, reflecting the government's serious attention to local debt issues. Through historical experience, the government has gradually improved the debt resolution mechanism, from regulating debt financing to eliminating hidden debts, showing policy continuity and targeting.

Explanation of Professional Terms:

• Replacement Bonds: Newly issued bonds that replace old ones, alleviating debt pressure.
• Hidden Debts: Debts that are not publicly disclosed but actually exist.
• Special Refinancing Bonds: Refinancing bonds used for specific purposes, such as resolving hidden debts.