ECONOMY

China’s LGFV Debt Cleanup Eases Pressure on Lower-Level Platforms

Published: Jun. 4, 2026 4:21 p.m. GMT+8

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The average debt ratio of China’s district- and county-level local government financing vehicles (LGFVs) remained below that of their municipal-level counterparts in 2025. Photo: VCG

The average debt ratio of China’s district- and county-level local government financing vehicles (LGFVs) remained below that of their municipal-level counterparts in 2025, a sign that Beijing’s debt-relief campaign has helped ease some pressure on the lower-level platforms.

The average liability-to-asset ratio for 637 district- and county-level LGFVs was 58.19% in 2025, compared with 59.46% for 234 municipal-level LGFVs, according to a report by Jiangsu Modern Asset Investment Management Consultant Co. Ltd.

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Explore the story in 30 seconds

In 2025, district/county LGFVs had lower average debt ratio (58.19%) than municipal ones (59.46%), continuing a trend since 2022.
Over 60% debt ratio was the largest group: 315 district/county vs 131 municipal. Leverage highest in eastern China, lowest in northeast.
Chairman Ding notes conflict between debt resolution and operational transition, especially at lower levels, suggesting differentiated strategies.

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Who’s Who

Jiangsu Modern Asset Investment Management Consultant Co. Ltd.: Jiangsu Modern Asset Investment Management Consultant Co. Ltd. is a Chinese consulting firm. In 2025, it reported that district- and county-level LGFVs had lower average debt ratios (58.19%) than municipal ones (59.46%). Chairman Ding Bokang highlighted challenges in debt resolution and suggested differentiated transition strategies for LGFVs.

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What Happened When

2020：: Top 100 district- and county-level LGFVs had higher average liability-to-asset ratios than municipal-level LGFVs.

2021：: Top 100 district- and county-level LGFVs had higher average liability-to-asset ratios than municipal-level LGFVs.

2022：: Average liability-to-asset ratio of district- and county-level LGFVs fell to 56.4%, below the 57.95% of municipal LGFVs, starting the trend of lower leverage at lower levels.