I. Trillion-Yuan Replacement Policies Precisely Alleviate Stock Pressure

Faced with the practical challenge of resolving local governments' implicit debt, China has launched an unprecedented "10+2" trillion-yuan debt resolution package, achieving a fundamental shift from emergency response to proactive resolution. Core measures include: newly adding a 6 trillion-yuan local government debt quota to replace stock implicit debt, to be implemented gradually over three years; allocating 800 billion yuan annually from special bonds for five consecutive years to supplement government fund financial resources, totaling 4 trillion yuan in implicit debt replacement; and maintaining the original contractual repayment arrangements for 2 trillion yuan of shantytown renovation implicit debt maturing after 2029. The synergistic effect of these three policies has reduced the implicit debt that local governments need to resolve by 2028 from 14.3 trillion yuan to 2.3 trillion yuan, cutting the annual average debt resolution pressure to one-sixth of the original level. Meanwhile, through the interest rate gap between statutory debt and implicit debt, an estimated 600 billion yuan in interest expenses will be saved over five years, effectively alleviating the contradiction between local fiscal revenue and expenditure.

II. Full-Chain Supervision Builds a "Firewall" Against New Debt

While resolving stock debt, China adheres to a "zero-tolerance" attitude toward curbing new implicit debt and has established a full-cycle supervision system covering pre-prevention, in-process monitoring, and post-accountability. At the policy level, refraining from adding new implicit debt is regarded as an "iron-clad discipline." Rigid budget constraints are strengthened, and no government investment projects not included in the budget shall be implemented, plugging illegal and irregular borrowing channels at the source. In terms of supervision mechanisms, an inter-departmental information sharing and collaborative supervision platform has been improved to conduct full-caliber monitoring of various types of local government debt, dynamically track core indicators such as debt ratio and debt-servicing ratio, and issue timely warnings for high-risk regions. Accountability has been continuously strengthened through the implementation of a lifelong accountability system for local government borrowing and a retrospective mechanism for debt issues. Every case of new implicit debt is detected and investigated, promoting the shift of supervision from "firefighting and patching" to "preventing problems before they occur" and resolutely safeguarding the bottom line of no systemic risks.

III. Long-Term Mechanism Construction Promotes Standardized Transformation of Debt Management

China is accelerating the construction of a long-term debt management mechanism compatible with high-quality development, realizing the transformation from "dual-track management" to standardized and transparent management. At the institutional level, the management mechanism integrating "borrowing, using, and repaying" has been improved. Strict quota management of local government debt is implemented, and the scale ratio between general bonds and special bonds is optimized to ensure that debt funds are used effectively and repaid on time. The management of special bonds continues to be upgraded: expanding investment areas, increasing the proportion of capital usage, strengthening the whole-life cycle supervision of projects, and enhancing the liquidity of assets corresponding to debt through means such as asset securitization (REITs). Meanwhile, the market-oriented transformation of local government financing platforms is promoted to strip them of their government financing functions. By the end of June 2027, the full-scale elimination of urban investment and construction platforms (Chengtou platforms) will be achieved, and high-quality platforms will be transformed into urban comprehensive operators or industrial investment groups, completely severing the binding relationship between government credit and Chengtou platform debt.

IV. Market-Oriented Measures Activate Endogenous Momentum for Debt Resolution

This round of debt resolution breaks away from traditional models and relies on the capital market to innovate resolution paths, realizing positive interaction between "debt resolution" and "development." On one hand, local governments are encouraged to raise debt-servicing funds through multiple channels, such as disposing of stock assets, reducing public expenses, and revitalizing idle resources, redirecting the freed-up financial resources to key areas such as technological innovation and people's livelihood security. On the other hand, market-oriented financing channels are expanded: supporting financial institutions in launching targeted support policies, optimizing the disposal methods of operational debt of Chengtou platforms, and improving the quality of financial assets and credit lending capacity. Provinces such as Zhejiang and Jilin have taken the lead in completing the clearance of key debts, with over 82% of Chengtou platforms having achieved market-oriented withdrawal. By introducing social capital to participate in the construction and operation of infrastructure, a positive cycle of "debt resolution – capital recovery – project upgrading" has been formed, injecting sustained momentum into local economies.

V. Central-Local Coordination Builds a Sustainable Fiscal Ecosystem

The fundamental resolution of local government debt issues cannot be separated from the organic combination of central overall coordination and local main responsibilities. At the central level, efforts to increase transfer payments have been intensified, the debt quota allocation mechanism has been optimized to tilt resources toward financially weak regions, and financing channels have been expanded through the issuance of ultra-long-term special national bonds to support the implementation of major national strategies. Local governments have fulfilled their main responsibilities by adopting classified policies based on their own debt risk conditions: high-risk regions focus on risk mitigation, while low-risk regions reasonably control the pace of debt growth. This central-local coordination model not only gives full play to local enthusiasm but also ensures policy consistency through a unified national institutional framework, keeping China's government debt ratio at a reasonable level of 67.5%, significantly lower than the average level of major economies. As the debt management mechanism continues to improve and local fiscal space is continuously released, it will provide a more solid fiscal guarantee for stable economic growth and sustained improvement in people's livelihoods.