A 10 trillion yuan debt campaign is cutting off-book local financing and straining spending, while Beijing plans a 7 trillion yuan centrally backed infrastructure push to help steady growth.
China’s 10 trillion yuan ($1.39 trillion) campaign to clean up hidden local government debt is reducing off-balance-sheet borrowing and tightening scrutiny of local investment, but it is also pushing local authorities into spending cutbacks that weigh on growth. As local governments trim payrolls, public services and capital spending, Beijing is accelerating already-budgeted national infrastructure projects rather than signaling broad new stimulus. State media said China plans to spend 7 trillion yuan ($1 trillion) this year on water networks, logistics, underground pipelines, power grids, telecommunications and computing power centres. Official data showed fixed-asset investment fell 5.7% year-on-year in the first six months of 2026, including a 2.4% drop in infrastructure investment, while economists and a government adviser said a late-July Politburo meeting could encourage faster project rollout and moderate frontloading of local debt quotas.