China has ordered investment banks to work on issuing US dollar bonds in Saudi Arabia with maturities of three and five years.
In a term sheet examined by Reuters, senior unsecured fixed-rate bonds will be issued depending on market conditions.
Recently, China’s Ministry of Finance announced that, with State Council approval, it would issue bonds in Saudi Arabia for a maximum of USD 2 billion.
A plan worth six trillion yuan (USD 837 billion) has been approved by China to support its struggling economy by enabling local governments to exchange their hidden debt. This plan also reveals more stimulus measures to counteract a potentially unstable growth path associated with Republican Donald Trump’s imminent return to the White House.
The six trillion yuan debt limit will be made available over three years to assist regional governments in replacing their alleged “hidden debt,” Finance Minister Lan Fo’an announced at a press conference.
Risky local government financing platforms supported by cities or provinces typically owe this type of debt.
“Since the beginning of this year, affected by a variety of factors, the central and local fiscal revenues have fallen short of expectations,” he added.
The announcement came at the end of a five-day meeting of the Standing Committee of the National People’s Congress, China’s highest legislative body.
Chinese local governments are struggling with mountains of debt as a result of years of stringent COVID-19 pandemic controls and a real estate crisis that has depleted their coffers. Some cities can no longer provide basic services due to the severity of the issue, and default risk is increasing.
According to Lan, China had a massive hidden debt balance of 14.3 trillion yuan (USD 1.99 trillion) at the end of 2023. By 2028, officials hope to reduce that sum to 2.3 trillion yuan (USD 320 billion).
In the three months between July and September 2024, China’s GDP increased by just 4.6% over the same period last year. That was only a bit more than the 4.5% expansion forecast by the economists surveyed by Reuters.