The Ministry of Finance issued a report on the implementation of China's fiscal policy for the first half of 2026, which mentioned that the risk of hidden existing debt was effectively mitigated. The first is to resolve existing hidden debts in an orderly manner. Implement a package debt settlement plan to guide all regions to steadily advance the resolution of hidden local debt stocks. By the end of July, 1.73 trillion yuan of replacement bonds had been issued in various regions, completing 86.7% of the 2026 2 trillion yuan amount. The second is to accelerate the reform and transformation of local government financing platforms. Guide local authorities to speed up the resolution of hidden debts existing on financing platforms, clarify the rights and responsibilities of governments and enterprises according to law and regulations, and speed up the divestment of government financing functions of financing platforms. Cooperate with financial management departments to optimize debt risk mitigation policies for financial support and financing platforms, and guide financial institutions to reduce the liquidity risk and interest burden of financing platforms through debt restructuring and other methods. The management of special bonds has been optimized and improved. The first is to optimize the management of the use of special bonds. The new special bonds focus on supporting the construction of major projects, replacing hidden debts, and absorbing government arrears. Adhere to the principle of positive incentives, consider major strategies and major project expenditure requirements determined by the Party Central Committee and the State Council in an integrated manner, and rationally allocate amounts according to the debt risk, financial situation, management level, and project funding requirements of each region, and favor regions with adequate project preparation, high investment efficiency, and good use of capital. By the end of July, an additional 2.41 trillion yuan of special bonds had been issued to support more than 18,000 construction projects. The second is to expand the scope of the “self-review and spontaneous” pilot. With the approval of the State Council, Hebei Province, Jiangxi Province, Hubei Province, and Chongqing City will be included in the scope of the new “self-review and spontaneous” pilot in 2026. Guide and supervise the newly included pilot regions to further improve working mechanisms, formulate regional pilot work plans, strengthen departmental coordination, improve the quality of project reserves, and speed up distribution and use. In the first half of the year, the “self-audit and spontaneous” pilot regions issued an additional 1.6 trillion yuan of special bonds, accounting for 77% of the national issuance amount. The third is to strengthen the review of special bond projects. Guide and supervise all regions to improve the normalized planning and reserve mechanism for projects, carry out in-depth pre-project work, and push for conditions to start construction as soon as possible. Guide and supervise “self-review and spontaneous” pilot regions to improve audit standards, strengthen the review, guidance and inspection of projects in non-“ self-review and spontaneous” pilot regions, strictly prohibit unprofitable projects, and strengthen checks on projects with repeated construction and low input-output ratios. Fourth, improve the management of the entire chain of special bonds. Guide and supervise all regions to coordinate and grasp the pace and progress of special bond issuance to achieve early issuance and early use. Strengthen penetrating supervision of special bond funds, carry out “scanning” checks on the use of special bond funds, and resolutely investigate and punish irregularities. Strengthen asset management for special bond projects, establish asset accounts for special bond projects, and promote the formation of a closed loop of management from fund management to asset management, and from debt side to asset side.

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