Beijing Tells Banks to Roll Over Local Agency Debts

Beijing sent a new set of instructions for its state-owned banks: to extend loan due dates for local governments under the Chinese Communist Party (CCP). The new loans will span a longer time and come with lower interest rates. The move will give local agencies more time to pay back the money they borrowed and pay less interest. It appears to be part of a broader effort as Beijing looks to reduce debt risks in a slowing economy. Economists are concerned that cities and towns with a lot of debt pose a significant risk to China's economy amid a deepening property crisis, years of over-investment in infrastructure, and huge spending to contain the COVID-19 pandemic. Local state agencies have racked up nearly $12.6 trillion in debt or more than three-quarters of the country's economic output in 2022.