Macro-financial risk
2026-04-26
12 minute read
16 sources
China LGFV Debt Resolution: The CNY 12 Trillion Swap, Property Overhang, and the 2026 Counter-Cyclical Test
On November 8, 2024 the National People's Congress Standing Committee endorsed a CNY 12 trillion frame to absorb local government hidden debt. Property investment fell 10.6 percent in 2024, Country Garden, Evergrande and Vanke moved through default and restructuring, and the PBoC cut the 7 day reverse repo rate to 1.5 percent. The 2026 question is whether the Three Year Action Plan converts a stock problem into a flow problem without monetizing it.
On November 8, 2024 NPC Standing Committee Chairman Zhao Leji and Finance Minister Lan Fo'an presented a CNY 12 trillion frame for local government hidden debt resolution: a CNY 6 trillion direct quota raised over 2024 to 2026, CNY 4 trillion of new local government special bond capacity repurposed toward debt swap, and a CNY 2 trillion l...