30 May, 2024. As recent developments in China's public finance continue to capture global attention, notable topics such as the issuance of ultra-long special government bonds, adjustments in the debt structure of China, evolving credit profiles of LGFVs (Local Government Financing Vehicles), and deepening fiscal and tax system reforms have come to the forefront. To provide international investors with a comprehensive understanding of these critical issues on the credit landscape of China, CSPI Ratings held a live webinar (In English): China's Public Finance: Reshaping the Debt Structure. Mr. Zuo Yiming (Jameson Zuo), Director of Public Finance at CSPI Ratings, led the webinar, which attracted numerous international investors. Through Mr. Zuo's expert insights, attendees gained new understanding and perspectives on China's public finance debt.

The webinar approached the topic from four angles: Enhanced Proactive Fiscal Approach, Central Government Increases Leverage, Local Governments Restructure Debts and Contingent Debt Resolution. It provided an in-depth analysis of the current state of China's public finance and offered future development forecasts.

Main Points:

Future public debt framework of China will be: active increase of debt by the central government, appropriate expansion of direct debt by local governments, and rigorous approaches to control and resolve contingent debt.

·       China’s overall public debt burden is under control.

·       Ultra-long-term special bonds continue to serve as a key tool to raise CG's debt ratio.

·       The overall fiscal equilibrium of LGs will be upheld while deficit and debt pressures persist.

·       The debt resolution schemes are short-term solution for contingent liabilities, but the strengthened management of LGFV debt by the government will help maintain the overall credit stability of existing LGFV debts..

·       As the strategic manoeuvring between the central and local governments persist, the future landscape suggests that commercialised state-owned enterprises may emerge as the primary drives of local leveraging efforts.

·       Such a shift will introduce distinct risk characteristics, potentially prompting a reevaluation and reshaping of credit analysis dimensions.

For more information on CSPI Ratings' international investor series, please contact globalservice@cspi-ratings.com.

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About CSPI Ratings

CSPI Ratings is an international credit rating agency based in Hong Kong, China. Licensed by the Hong Kong Securities and Futures Commission in 2012, CSPI Ratings combines world-class credit analysis with a unique perspective on the emerging world to provide globally benchmarked credit ratings and original credit research for global capital markets.

CSPI Ratings is a member of the China Securities Credit Investment Co., Ltd. (CSCI), a nationwide comprehensive credit service organization founded by 35 leading financial institutions in China. CSPI Ratings is an international brand wholly owned by CSCI Pengyuan, China's leading domestic credit rating agency. From 2012 to 2022, CSPI Ratings had operated under the well-known brand name " Pengyuan International".

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