BEIJING – Chinese lawmakers have approved a State Council bill on raising the ceiling on local government debt by 6 trillion yuan (about $840 billion) to replace existing hidden debts.

Xu Hongcai, deputy head of the financial and economic affairs committee of the National People's Congress (NPC), China's top legislature, revealed the approval to the media after the Standing Committee of the 14th NPC concluded its 12th session in Beijing on Friday.

Zhao Leji, chairman of the NPC Standing Committee, presided over the closing meeting.

Under the new arrangement, the debt ceiling for special local government debt will be increased to 35.52 trillion yuan from 29.52 trillion yuan by the end of 2024.

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Also starting from 2024, China will set aside 800 billion yuan from each year's new special-purpose bonds for local governments for five consecutive years, thereby providing debt relief to replace 4 trillion yuan of hidden debts, according to Minister of Finance Lan Fo'an.

The new measures will add a combined 10 trillion yuan to China's debt relief resources, he told the press conference.

Meanwhile, the 2 trillion yuan of hidden debts resulting from housing improvement projects in run-down areas due by 2029 and beyond will be paid in accordance with the original contracts.

As a result, the amount of hidden debts that China's local governments need to deal with by 2028 is expected to drop from 14.3 trillion yuan to 2.3 trillion yuan, said the minister.

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Zhao chaired a meeting of the Council of Chairpersons of the NPC Standing Committee before the closing meeting and presided over a lecture for lawmakers after the closing meeting.