(Yicai) June 10 -- Zhejiang province’s new debt ceiling has been raised by more than a fifth, reflecting the Chinese finance ministry’s strategy of gradually prioritizing economically robust provinces when allocating new local government debt quotas.

Zhejiang, an economically developed coastal province to the south of Shanghai, has been given a CNY378.8 billion (USD53 billion) new local government debt limit for this year, a 22.3 percent on last year, according to an updated budget plan recently released by its finance bureau, which is well above the average 12.6 percent increase for provincial-level regions nationally.

With the higher quota, Zhejiang can secure more funding for major infrastructure projects, strengthening support to stabilize growth and advance local economic restructuring.

CNY32.5 billion (USD4.5 billion) of the new quota is for general debt, which finances non-revenue-generating public welfare projects, repaid via general public income, and CNY346.3 billion for special-purpose bonds, which support partially revenue-generating projects, repaid through government-managed funds or dedicated project income, according to official figures.

In addition, Zhejiang’s allocation represents 7.3 percent of China’s total new local debt quota, despite the province contributing only about 6.7 percent to national gross domestic product last year. By contrast, its fiscal revenue accounted for 8.4 percent of the national total in 2024, laying the groundwork for expanded borrowing capacity.

Finance ministry officials have previously said that it will increase special-bond financing support for major economic provinces, with future allocations favoring regions that have thoroughly prepared projects and high investment efficiency.

Zhejiang's stepped-up debt issuance also aligns with its inclusion in a 2025 pilot program allowing "self-review and self-issuance" of local government special bonds in 10 provinces. Under the program, once its project list is approved at the provincial level, Zhejiang can immediately sell the bonds to raise investment funds without further central government review.

Zhejiang’s local government debt risk remains generally safe and controllable. Its outstanding debt stood at about CNY2.73 trillion (USD380 billion) as of Dec. 31, below the State Council-mandated ceiling of CNY2.95 trillion, according to data from the local finance department. 

Editor: Martin Kadiev