The Guangxi Zhuang Autonomous Region's Department of Finance recently disclosed plans to issue government bonds totaling 40.721 billion yuan on April 22. Among these, 15 billion yuan are special refinancing bonds, with raised funds designated for replacing existing hidden debt.
Currently, the implementation of the comprehensive debt resolution policy has entered its third year. Replacing hidden debt with government bond quotas remains the primary method for local debt resolution across various regions.
Data from Enterprise Early Warning indicates that as of April 17, 2026, local governments have issued approximately 1.13 trillion yuan in government bonds for replacing existing hidden debt. This accounts for about 40% of this year's total debt resolution quota of 2.8 trillion yuan. Furthermore, the bond issuance progress for replacing hidden debt has reached 100% in five regions: Xiamen, Inner Mongolia, Jilin, Ningxia, and Xinjiang. The issuance progress in Zhejiang, Fujian, and Hebei provinces has each exceeded 99%.
Debt resolution efforts are accelerating as the deadlines approach: the goal to clear existing hidden debt by 2028 and the mid-2027 target for local urban investment companies to exit their "platform" status. This has pushed local debt resolution work into a critical phase.
Supported by fiscal policy this year, local governments have accelerated the issuance of special refinancing bonds and new special bonds aimed at replacing existing hidden debt. Concurrently, with the rapid allocation of debt resolution funds, the scale of hidden debt is being reduced at a faster pace, leading many regions to announce the achievement of "hidden debt clearance."
According to Enterprise Early Warning data, local governments have issued about 1.13 trillion yuan in government bonds for hidden debt replacement as of April 17. Under the central government's earlier comprehensive debt resolution plan, the total local bond replacement quota for the year is 2.8 trillion yuan, comprising 2 trillion yuan in special refinancing bonds and 0.8 trillion yuan in new special bonds. This means the current issuance volume for replacement bonds already constitutes 40% of the annual quota.
Additionally, overall bond issuance progress for hidden debt replacement across regions has exceeded 55% this year. The five regions mentioned above have achieved 100% progress, while Zhejiang, Fujian, and Hebei have all surpassed 99%, with remaining quotas under 1%.
Market estimates suggest that the 960 billion yuan in special refinancing bonds issued in the first quarter could save local governments approximately 24 billion yuan in annual interest expenses. This not only effectively reduces the fiscal burden on localities but also frees up more fiscal resources to be directed towards critical areas such as social welfare, technological innovation, and infrastructure development.
Notably, several regions have declared targets for achieving "zero" hidden debt in their government work reports this year. For instance, Gansu Province stated it would fully utilize debt resolution policies to help eligible cities and counties achieve hidden debt clearance ahead of schedule. The Tibet Autonomous Region also mentioned advancing towards full regional hidden debt clearance. Xi'an and Yan'an cities in Shaanxi Province both expressed aims to strive for the "dual clearance" of both hidden debt and financing platforms. Changchun City in Jilin Province proposed accelerating the pace towards citywide "dual clearance." Laibin City in Guangxi pledged to ensure the timely achievement of the goal to clear all maturing存量 debt.
Industry insiders believe that key provinces will accelerate the resolution of hidden debt in high-risk areas this year, with more regions expected to achieve full regional hidden debt clearance.
Zhang Lin, Deputy Director of Far East Credit Rating Research Institute, stated that to date, Jilin, Inner Mongolia, and Ningxia have successfully exited the list of provinces with significant local debt concerns, and many areas have announced "hidden debt clearance." For example, Siping City and Songyuan City in Jilin Province, as well as Shuangyashan City in Heilongjiang Province, all reported achieving hidden debt clearance last year.
Hidden Debt Scale Expected to Drop to 2.5 Trillion Yuan by Year-End "Judging from the overall progress of local debt resolution work, substantial results have been achieved: the debt scale has been reduced, financing costs have continued to decline, and the debt structure has been optimized," Zhang Lin said. Based on hidden debt figures reported by provinces to the Ministry of Finance's monitoring platform, hidden debt decreased from 28.6 trillion yuan in 2018 to 14.3 trillion yuan at the end of 2023, and further dropped to 10.5 trillion yuan by the end of 2024. It is estimated that by the end of 2025, it had fallen to approximately 6.5 trillion yuan. The scale of operational debt reported by provinces decreased from 19.7 trillion yuan in 2023 to 14.8 trillion yuan by the end of 2024, and further declined to about 7.5 trillion yuan by the third quarter of 2025.
Zhang Lin further indicated that local debt resolution will continue this year. After the 2 trillion yuan replacement quota is issued, the remaining hidden debt requiring local governments to resolve independently is expected to drop to around 4.5 trillion yuan. Overall, the pressure of local government debt interest payments has significantly decreased, and debt risks are generally controllable. Considering the resolution of hidden debt through other types of funds, such as special new special bonds and refinancing bonds used for repaying existing debt, the hidden debt scale could decrease further. If the pace is maintained consistent with 2025, hidden debt might fall to 2.5 trillion yuan by the end of 2026.
It is worth noting that the focus of local debt risk resolution has gradually shifted this year towards the operational debt of financing platforms. Unlike hidden debt, the operational debt of financing platforms is incurred by these platform companies in their capacity as enterprises during market-oriented operations. Legally, this debt should be repaid by the platforms themselves using operational income; it does not constitute a contingent liability for which the government bears repayment responsibility.
According to estimates by Far East Credit's Money and Interest Rate Research Center, the scale of interest-bearing debt for urban investment companies (excluding subsidiaries and grandchild companies) was 58.7 trillion yuan in 2024. However, Wang Chen, Director of the center, noted that this figure is relatively conservative because some urban investment platforms have not publicly issued bonds and lack public disclosure for statistical purposes. This total also includes debt that has already undergone financial debt resolution measures like interest rate reductions and extensions. Excluding long-term debt and considering only short-term borrowings, short-term bonds, and high-interest non-standard debt—which are more likely to pose immediate risks—the potential scale of such debt is estimated to be around 17.8 trillion yuan.
Regarding how to resolve risks associated with this type of debt, the Central Economic Work Conference held at the end of 2025 explicitly stated for the first time the need to optimize methods for debt restructuring and replacement, and to employ multiple measures to resolve the risks of operational debt of local government financing platforms.
Wang Chen stated in an interview that, in practice, localities primarily address operational debt risks through financial debt resolution methods. On one hand, risks are mitigated through bank loan replacements, extensions, and interest rate reductions, applying the principle of "replacing high interest with low interest, trading time for space" to ease liquidity pressure on financing platforms—this being the most common approach currently. On the other hand, some regions are actively exploring the use of Asset Management Companies (AMCs) to assist in resolving operational debt risks, employing specific methods such as debt restructuring and debt-to-equity swaps. Furthermore, local governments are actively promoting the revitalization of existing assets through methods like asset securitization and concession rights, which can also provide additional funds for local debt resolution.