Overview

• Officials are considering asking state-owned banks to lend to local governments so they can settle overdue payments to the private sector, according to unnamed sources.
• Talks have reportedly examined an initial tranche covering at least ¥1 trillion ($140 billion) of obligations owed to companies.
• The reported goal targets completion by 2027, though the overall funding scale beyond the first phase remains unclear.
• Unpaid bills owed by local government entities to corporates and civil servants are estimated near ¥10 trillion ($1.4 trillion), roughly 7% of last year’s GDP.
• Delayed payments are described as eroding trust in the private sector and complicating Xi Jinping’s ‘common prosperity’ aims.