(Yicai) March 6 -- China is making room to increase its national debt with a more proactive fiscal policy this year after its debt-to-gross domestic product ratio reached 60.9 percent last year.  

This year's budget shows that China's limit for central government debt is CNY42 trillion (USD5.8 trillion), whereas local governments will assign a maximum of CNY18 trillion for general debt and up to CNY39.9 trillion for special projects, resulting in a total debt ceiling of CNY99.99 trillion, according to a report disclosed by Xinhua News Agency yesterday.

Last December, the Central Economic Work Conference vowed a “more proactive” fiscal stance this year. As of Dec. 31, 2024, China's total balance of government debt was around CNY82.11 trillion, remaining within a pre-set limit, according to the latest budget report.

China’s debt-to-GDP ratio remains low in comparison to major global economies as the average of G20 countries was 118.2 percent while G7 countries reported a ratio of 123.4 percent as of late 2023, Finance Minister Lan Fo'an said last November.

Proceeds from local government bonds have supported the construction of numerous projects involving transportation, water conservancy, and energy, forming effective assets, Lan said. Many of these assets generate sustainable income, providing strong support for high-quality economic development and serving as important sources of debt repayment, he added.

The government still maintains substantial borrowing capacity. The plan is to issue more treasury bonds to stabilize economic growth, safeguard people's livelihood, and boost consumption. This year, the scale of new government debt will reach CNY11.86 trillion, an increase of CNY2.9 trillion (USD400.2 billion) over the previous year, signaling surging fiscal expenditures.

The central government is addressing local governments' off-balance-sheet borrowing. In the five years leading to 2028, the nation will issue a total of CNY10 trillion in treasury bonds to replace regional hidden debts, bringing them to light while strengthening management and reducing interest pressures.

Editor: Emmi Laine