China urges prudence over plenty in rural projects as local debt clouds linger

In a document on the future of its rural revitalisation campaign, China’s State Council has encouraged mindful, cautious use of resources

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China’s State Council has encouraged local governments to be more cautious in their spending on rural projects as concerns linger over debt. Photo: Xinhua

Published: 7:00pm, 24 Jan 2025

While continuing to press for “substantial progress” on the long-term goals of its rural revitalisation campaign, China has ordered local governments to prioritise fiscal responsibility over excessive spending on projects intended to narrow gaps in quality of life between the cities and the countryside.

These investments must align with localities’ actual capacity to avoid accumulating debt, according to a rural work plan for 2024 to 2027 issued on Wednesday by the State Council, China’s cabinet.

The warning came as the country’s top legislature approved an unprecedented 12 trillion yuan (US$1.6 trillion) rescue package in November to begin unravelling a tangle of local debt over the subsequent five years.

Local governments, deprived of the land sale income they previously enjoyed as a slump continues in the property market, have thus been cautious in their spending.

A careful budget is in accordance with the central government’s mandate to ban high-visibility, impractical “image projects” and address genuine needs in rural areas, said Zheng Fengtian, a professor at Renmin University’s School of Agricultural Economics and Rural Development in Beijing.

Numerous public welfare projects have been undertaken during the country’s rural revitalisation drive, largely driven by local government funding.