China has slashed the number of its local government financing vehicles (LGFVs) by 71% and cut their business-related financial debt by 62% since early 2023, the country’s central bank governor said—marking a significant milestone in Beijing’s campaign to defuse one of the greatest threats to its economy, reports Caixin. As of the end of September 2025, both the number of LGFVs and their outstanding financial obligations had dropped dramatically compared with March 2023 levels, People’s Bank of China Governor Pan Gongsheng said in a report on financial work presented to the National People’s Congress Standing Committee on behalf of the State Council.
Pan told lawmakers on Oct. 26 that risks stemming from LGFV debt have been “significantly mitigated.”
The reductions stem from a broad debt resolution initiative launched in July 2023. The campaign deployed a mix of fiscal and financial measures—including roughly RMB 1.5 trillion ($210 billion) in special refinancing bonds to repay hidden government debt and instructions to commercial banks to restructure or replace high-interest LGFV loans across 12 high-risk provinces.