(Yicai) Dec 2. -- China’s annual local government bond issuance has surpassed CNY10 trillion (USD1.41 trillion) for the first time, while still remaining within the statutory debt ceiling.

Regional debt issuance totaled about CNY10.1 trillion as of Dec. 2, according to data from the third-party platform Enterprise Early Warning.

Wen Laicheng, a professor at the Central University of Finance and Economics, told Yicai that the issuance scale surpassing CNY10 trillion for the first time is a milestone. Overall, he said, the issuance of local government bonds has grown rapidly in recent years. The current balance of local government debt has already exceeded CNY50 trillion, but it remains within the statutory limit, meaning the overall debt risk is manageable and controllable.

However, Wen cautioned that it is still necessary to guard against the challenges that excessively rapid debt growth may pose to the medium- and long-term fiscal sustainability of local governments.

According to data from the finance ministry, as of the end of September, China’s local government debt balance stood at about CNY53.7 trillion, remaining within the debt ceiling of CNY57.9 trillion.

Before 2015, the Budget Law did not grant local governments the authority to issue debt. As a result, the finance ministry issued only a small number of government bonds on their behalf. Later, some regions were allowed to pilot self-issuance and self-repayment mechanisms, keeping the overall scale of local government bond issuance relatively small, typically in the hundreds of billions of yuan. For example, in 2014, local government bond issuance totaled only CNY400 billion.

The revised Budget Law implemented in 2015 granted provincial-level governments the authority to raise debt through bond issuance. Since then, the scale of local government bond issuance has generally shown a fluctuating upward trend. In 2025, to stabilize investment and continue replacing local government hidden debt, the total issuance surpassed CNY10 trillion for the first time.

Looking ahead, Wen said that local government bond issuance growth should be moderately controlled. He added that performance management should be strengthened to improve the efficiency of the use of bond funds, and long-term mechanisms should be established to prevent and resolve local government debt risks.

Editor: Emmi Laine