China caps amount of local govt debt

BEIJING -- China has put a ceiling on the amount of local government debt, according to the central budget for 2016 released by the Ministry of Finance (MOF) Wednesday.

The total outstanding debt of China's local governments must be kept under 17.2 trillion yuan ($2.6 trillion dollars) at the end of 2016, said the MOF.

The budget was approved by the National People's Congress, China's top legislature, on March 16.

China is trying to rein in local government debt mainly caused by borrowing during an investment and construction binge that followed the global financial crisis in 2008.

A debt swap mechanism allows local governments to convert their debt to low-interest bonds, easing the debt burden without disrupting the broader economy.