China evaluates proposal to boost local government financing.

• On Monday, China's parliament reviewed a proposal to increase the local government debt limit, as reported by state media.
• The report stated that Finance Minister Lan Fo'an discussed the plan to replace hidden debt with new debt at a meeting.
• This week, the standing committee of China's National People's Congress is expected to approve additional fiscal support for the country's slowing economy.

The parliament standing committee of China reviewed a proposal to increase the local government debt limit on Monday, as reported by state media.

The report stated that Finance Minister Lan Fo'an discussed the plan to replace hidden debt with new debt at a meeting.

Last month, Lan announced at a press conference that an increase in the local debt limit was imminent. Historically, local authorities in China have been responsible for a significant portion of public services spending, but have faced financial challenges as revenue from land sales to developers has decreased.

According to Ting Lu, the chief China economist at Nomura, China has approximately 50 trillion yuan to 60 trillion yuan (about $7 trillion to $8.45 trillion) in outstanding hidden debt.

Over the next few years, it is estimated that an additional 10 trillion yuan in debt quota could be approved to swap out part of the concealed debt.

If China's economy faces even bigger challenges, Beijing may eventually increase the debt swap to RMB15 trillion, according to Lu.

The National People's Congress's standing committee is meeting this week to discuss further fiscal support for China's slowing economy. The committee, led by Chair Zhao Leji, is expected to approve the measures and conclude on Friday.