China’s 10 trillion yuan is not an economic stimulus plan

Starting from 2024, China will arrange 800 billion yuan from the newly added local government special bonds every year for five consecutive years, specifically for debt repayment, and the cumulative replacement of hidden debt is 4 trillion yuan.

In addition to the 6 trillion yuan debt limit approved by the Standing Committee of the National People’s Congress this time, the local debt repayment resources will be directly increased by 10 trillion yuan.

Chen Guo, chief strategy analyst of CITIC Construction Investment Securities, said that the 10 trillion yuan debt repayment resources were first implemented to consolidate the logic of asset revaluation. The central government has taken action to promote the stabilization of the real estate market and support the two new and two heavy industries, and the expectations are still there.

The funds are divided into two parts: one is the 6 trillion yuan debt limit for debt repayment, which will be issued in three years, opening up space for local governments to continue to borrow; the second is to arrange 800 billion yuan from the newly added local government special bonds every year in the next five years, with a total of 4 trillion yuan, specifically for debt repayment.

Added together, the 10 trillion yuan “debt repayment resources” are full.