China Allocates 550 Billion Yuan in Unused Debt Quotas to Support Local Governments and Infrastructure

China allocated 550 billion yuan ($82 billion) in unused government debt quotas on Friday to shore up local government finances and accelerate infrastructure investment, according to the finance ministry.

The move followed a string of weaker economic readings that has increased pressure to meet this year’s growth target of 4.5% to 5%. Momentum cooled after the first quarter as tepid domestic demand and a prolonged property downturn offset strength in high-tech sectors and goods exports.

Where the money will go

Of the total, 300 billion yuan is earmarked for the daily operations of county-level and district-level governments, the ministry said. The remainder will fund infrastructure projects, with priority for projects already under construction and for economically stronger regions.

The allocation builds on a pledge last month by the State Council, China’s cabinet, to step up counter-cyclical policy support to address rising economic strain. Beijing tapped unused debt quotas for similar year-end pushes in the past two years, but this year’s figure exceeds both the 2024 and 2025 amounts.

In a separate statement, the finance ministry said it would implement a more proactive fiscal policy and work to expand domestic demand. The announcement underlines how officials are leaning on fiscal tools to sustain activity while consumption and private investment remain soft.

Reporting based on coverage by Reuters.