Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The central government has shifted from "overall resolution and risk prevention" to more proactive "active debt resolution", strictly controlling the source of risks and emphasizing the optimization of debt restructuring and replacement methods. It has also clearly distinguished "operating debts of financing platforms" and included the risk of such debts in the key resolution scope [7][19]. - The resolution of local government implicit debts has advanced steadily, with the risk being continuously mitigated. However, the market has begun to focus on the operating debt risks of financing platforms, especially the disposal methods for such debts after 2028 [2][7]. - There are three possible paths for resolving the operating debts of financing platforms in the future: fiscal replacement after re - identification, financial debt resolution, and market - based disposal [7][31]. - The large - scale fiscal management reform in Hubei Province provides an important reference for local debt resolution and the market - oriented transformation of urban investment platforms [7][36]. - The disposal methods for the operating debt risks of financing platforms after 2028 are uncertain. If fiscal replacement is used again, a new round of inventory and statistics of local government off - balance - sheet debts may start from 2026 - 2027. If market - based resolution is adopted, attention should be paid to the creditworthiness of state - owned enterprises, especially the valuation risks of urban investment entities in relatively weak regions and with weak credit qualifications [7][36]. Summary by Related Catalogs 1. Implicit Debts Significantly Resolved, but Operating Debts of Financing Platforms Grow Significantly - The resolution of local government implicit debts has advanced steadily. Since 2024, a total of 10 trillion yuan of debt replacement resources have been arranged, and the implicit debt that local governments need to digest before 2028 has decreased from 14.3 trillion yuan to 2.3 trillion yuan [12]. - The scale and proportion of debt - resolution funds have increased significantly. Policy support has effectively matched the needs of local debt resolution, and most implicit debts are expected to be resolved by 2028 [14]. - Since 2018, the interest - bearing debts of urban investment entities have continued to expand. As of November 2025, they have reached about 78.8 trillion yuan, and it is estimated that they will reach nearly 83.5 trillion yuan by 2028. The stock of urban investment bonds has remained stable but decreased slightly, while the bonds of "pan - urban investment" entities have increased [19]. 2. New Ideas for Debt Resolution in the Central Economic Work Conference - By comparing the statements of the Central Economic Work Conferences from 2023 to 2025 on local government debt risks, it can be seen that the policy goals have evolved from "prevention and resolution" to "resolution", from "overall resolution" to "active and orderly resolution", and from "holding the bottom line" to "urging active debt resolution", reflecting a more proactive and targeted policy orientation [27][30]. 3. After 2028, for the Operating Debts of Financing Platforms: Restructuring or Replacement? - The central government's debt - resolution measures are becoming more market - oriented and professional. There are three possible paths for resolving the operating debts of financing platforms: fiscal replacement after re - identification, financial debt resolution, and market - based disposal [31]. - The large - scale fiscal reform in Hubei Province provides a sample for local debt resolution. By introducing social capital through asset securitization, it effectively alleviates the current debt - repayment pressure of local governments and enhances fiscal sustainability [36].

Core Viewpoint - The Central Economic Work Conference emphasizes the need to actively and orderly resolve local government debt risks, urging local governments to proactively manage debt and prohibiting the illegal addition of hidden debts [1][3]. Group 1: Debt Management Strategies - The policy aims to balance debt resolution and economic growth, indicating a focus on both reducing existing risks and strictly controlling new risks [1][3]. - The approach to debt management is evolving, moving beyond simple extensions and refinancing to more market-oriented and comprehensive solutions [1][3]. - The classification of platform debts is a significant development, allowing for differentiated treatment of government and operational debts, which provides room for financing platform transformation [1][3]. Group 2: Future Measures - Future measures may include expanding the quota for special refinancing bonds to replace high-interest existing debts [1][3]. - There is potential for promoting asset securitization of financing platform assets and involving social capital in debt restructuring [1][3]. - Strengthening the lifelong accountability system for local government debt and establishing a stricter risk warning system may also be on the agenda [1][3]. Group 3: Core Logic of Debt Resolution - The core logic of debt resolution is to open the front door and block the back door, replacing hidden debts with compliant financing tools and using market-oriented methods to mitigate platform risks, aiming for a "soft landing" of debt [2][4].