In stimulus signal, China’s top legislature mulls debt swap plan on first day

China’s top legislative body is reviewing local debt swaps on the first day of its session, suggesting more fiscal stimulus could arrive

Reading Time:3 minutes

China’s top legislative body is meeting in a closely watched session likely to address several pressing economic issues. Photo: AFP

Frank Tangin BeijingandJi Siqiin Beijing

Published: 6:29pm, 4 Nov 2024Updated: 2:55pm, 8 Nov 2024

China’s top legislative body reviewed a bill covering local debt swaps on Monday, the first of several actions expected to be taken this week to reduce fiscal risks and shore up the national economy.

Finance minister Lan Foan delivered the proposal – an increase to the local government debt quota that would then be used to convert implicit liabilities – to the National People’s Congress (NPC) Standing Committee, the official Xinhua News Agency reported.

The committee’s activities are being closely watched by markets and analysts in anticipation of a blockbuster fiscal stimulus package, with estimates of its ultimate scale ranging from 2 trillion yuan (US$280.76 billion) to over 10 trillion yuan.

The legislative body convened on Monday for a week-long session scheduled to conclude Friday.

“It’s a matter of sooner or later for local debt swaps, regardless of what happens in the US [presidential] election,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

“Other measures are possibly on the way,” he added. “In terms of the magnitude of new policy, particularly fiscal policy next year, it may be contingent on who becomes the next US President and the likelihood of a trade war.”