China"s recent financial strategy will have a significant impact on local infrastructure funding. To address the financial challenges faced by local governments, authorities have announced that a portion of the proceeds from new local government special bonds will be used to repay existing debts.

This year, local governments are allowed to issue 3.9 trillion yuan ($539 billion) in new bonds, which has traditionally been used for public works projects. However, there is a notable change in the allocation of funds. Starting this year, 800 billion yuan from these bond sales will be used annually to address older hidden debts, and this practice will continue until 2028. This decision could potentially limit the resources available for new infrastructure initiatives across the country.