The Chinese Minister of Finance, Lan Fuan, recently revealed that by the end of 2024, the total government debt in China will have reached 92.6 trillion yuan. This includes 10.5 trillion yuan in hidden local government debt, 34.6 trillion yuan in national debt, and 47.5 trillion yuan in legally mandated local government debt.
Hidden debt refers to loans taken by local governments beyond the official debt limit, which are directly or indirectly repaid with fiscal funds or illegally guaranteed.
The strict zero-COVID policy imposed by the Chinese government from 2020 to 2022 drained local finances. Since the second half of 2021, the salary cuts for civil servants have affected almost every province, with allowances and bonuses being reduced or canceled. Even after the end of the zero-COVID policy in late 2022, the Chinese economy continued to decline, making recovery difficult. Recently, the Chinese government has frequently mentioned the need to “live frugally.”
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