“十五五”地方政府隐性债务治理将有大突破｜解读“十五五”

Core Viewpoint - The Chinese government is accelerating the reduction of local government hidden debt, aiming for a significant decrease over the next five years, with a target to gradually "clear" this debt by 2028 [1][2]. Group 1: Hidden Debt Reduction - The total balance of local government hidden debt in China was 14.3 trillion yuan at the end of 2023, a reduction of 50% compared to the baseline figure at the end of 2018 [3]. - The central government has implemented a comprehensive plan to resolve local government hidden debt, which includes issuing 10 trillion yuan in government bonds to replace the same amount of hidden debt from 2024 to 2028 [4][7]. - By the end of 2024, local government hidden debt is expected to decrease to 10.5 trillion yuan, a reduction of approximately 3.8 trillion yuan from the end of 2023 [7]. Group 2: Financing Platform Companies - Local government hidden debt is primarily incurred through local financing platform companies, which are being urged to transition away from government financing roles to become ordinary state-owned enterprises [8]. - The number of financing platforms is projected to decrease by 71% by the end of September 2025 compared to March 2023, indicating a significant reduction in their role [8][9]. - By June 2027, all financing platform companies are expected to exit the government financing list, with over 90% anticipated to complete this transition by the end of 2026 [9]. Group 3: Challenges and Recommendations - The process of reducing hidden debt faces challenges, including economic fluctuations and uncertainties that may increase liquidity pressure on local governments [10]. - Experts suggest that the Ministry of Finance should enhance coordination in debt management and support the transition of financing platforms while ensuring accountability for any new hidden debt [13][14]. - Establishing a government asset-liability balance sheet is recommended to improve the efficiency of debt-to-asset conversion and enhance fiscal sustainability [14].