The People's Bank of China, the country's central bank, will provide emergency liquidity support for local governments facing relatively heavy debt burden when necessary, said Pan Gongsheng, governor of the PBOC. Overall, China's size of government debt is on the lower-middle end globally, Pan said on Wednesday at the opening ceremony of the Annual Conference of Financial Street Forum 2023 in Beijing.

Pan said that financial regulators, in collaboration with relevant authorities, have taken various measures this year to proactively assist local governments in resolving debt risks.

Steps have been taken to promote the transition of local government financing vehicles (LGFVs) into financially independent, sustainable enterprises that do not rely on government credit.

Other measures include encouraging local governments and LGFVs to use proceeds related to their assets to repay debts; limiting indebted local governments from initiating new investment projects; and facilitating financial institutions engaging in debt resolution through maturity extension, refinancing and debt swaps.