China's 2015 local debt swap (2015-2018)
China's Ministry of Finance launched a program to swap local government debt into bonds, converting opaque borrowing by local government financing vehicles into transparent, lower-cost bonds. The program covered trillions of yuan over several years.
Lowered local borrowing costs and made debt visible on government balance sheets.
The swap didn't stop local governments from accumulating new hidden debt, which is why a second, larger replacement program was needed.
The current 6 trillion yuan replacement program is the same mechanism, applied to debt accumulated since the 2015 swap.
