China publicly names officials in ‘unprecedented’ hidden-debt crackdown. Can it work?

China has recently announced the names of officials involved in hidden debt issues, in an unprecedented move that aims to tackle the problem more effectively. The Ministry of Finance (MoF) and the Central Commission for Discipline Inspection (CCDI) jointly issued a circular outlining six examples of local authorities that failed to address unrecorded liabilities in six provinces.

A notable case involved Wu Shenghua, the former Communist Party secretary of Bijie, in southwestern Guizhou province. He was named for his failure to take effective action on debt-resolution efforts between 2022 and 2025, and for making controversial remarks at public gatherings. The circular also highlighted that more than 2,100 local government-funded ventures (LGFVs) posted losses, with declining revenues due to shrinking land-sale earnings leaving local governments with spendings that could not be fully covered by fiscal revenue.

Analysts express optimism that the announcement will deter officials from taking on new off-book borrowings, as tighter monitoring and disciplinary action are expected to be implemented. However, concerns remain over the true financial health of local governments, as total LGFV liabilities are estimated to be around 71 trillion yuan, far exceeding the 14.3 trillion yuan officially identified hidden debt.

Experts warn that while China's 2028 target to eliminate hidden debt may be political and accounting-focused, it may not signify a complete resolution of financial risks for local governments.