The Ministry of Finance released its report on the implementation of China's fiscal policy in the first half of 2026 on the 9th, stating that risks from existing hidden debts have been effectively mitigated.

First, existing hidden debts are being resolved in an orderly manner. A comprehensive debt resolution plan was implemented, guiding all localities to steadily advance the resolution of local existing hidden debts. As of the end of July, localities had issued 1.73 trillion yuan in replacement bonds, completing 86.7% of the 2 trillion yuan quota for 2026.

Second, the reform and transformation of local government financing vehicles is being accelerated. Localities were guided to speed up the resolution of existing hidden debts of financing vehicles, clarify government and enterprise rights and responsibilities in accordance with laws and regulations, and accelerate the stripping of the government financing function from financing vehicles. In coordination with financial regulatory authorities, policies supporting the resolution of debt risks of financing vehicles were optimized, guiding financial institutions to reduce liquidity risks and interest burdens of financing vehicles through debt restructuring and other means.

The report also noted that the Ministry of Finance arranged the use of 550 billion yuan from the outstanding limit of local government debt to improve the general public budget guarantee capacity of counties and districts and support localities in expanding effective investment. Of the 550 billion yuan in local government debt outstanding limit allocated to localities, 300 billion yuan is the general debt outstanding limit, all allocated to counties and districts for use, specifically to improve their general public budget guarantee capacity; the 250 billion yuan special debt outstanding limit is allocated to regions with actual project funding needs in the fourth quarter of this year, with a tilt toward major economic provinces, supporting the priority guarantee of funding needs for projects under construction, while new projects focus on key areas such as the construction of the "six networks," effectively leveraging the driving role of government investment.