China is weighing a plan to use state-owned banks and policy lenders to help local governments pay off a mountain of overdue bills, with arrears estimated at more than US$1 trillion.
Under the proposal, banks would provide short-term loans to regional authorities so they can clear debts owed to private companies.
An initial phase aims to cover at least one trillion yuan in liabilities, with the effort running through 2027. President Xi Jinping has warned that delayed payments threaten trust in government and risk crippling the private sector. While the move would ease pressure on businesses, it could add strain to banks already dealing with rising loan losses.