China's Pledge to Tackle Local Government Debt Risks with Coordinated Support

China's central bank, the People's Bank of China (PBOC), has pledged to coordinate financial support to address local government debt risks, as concerns grow over the spillover effects of the country's deepening property crisis on its financial system. The PBOC's statement comes after a joint meeting with top financial regulators, and it emphasizes the need to prevent systemic risk and strengthen risk monitoring. Analysts believe that a coordinated rescue package may involve additional funding, debt swaps, and possible debt restructurings. The central government is expected to avoid outright bailouts of troubled municipalities. The PBOC also urged banks to increase lending to support the real economy, while optimizing credit policies for the property sector and providing strong support to small firms, technology innovation, and the manufacturing sector. However, consumer and business sentiment remains cautious, leading to a decline in new bank lending.