Legal analysis: local debt replacement refers to a way for local governments to smoothly extend their debts by borrowing new debts to repay old debts under the condition of moderate interest rates, so as to alleviate the pressure on local debts.

When local governments were in bond swap, the adjustment of stock allowed local governments to convert some high-cost debts due into local government bonds, with the direct purpose of adjusting the stock structure of local debts.

Local replacement bonds will be divided into general bonds and special bonds. General bonds will be used for non-profit public welfare projects, and the final debt and interest will be repaid by general public budget income. Special bonds will be used for public welfare projects with certain income, and finally the debts and interest will be repaid by the corresponding government funds or special income of the project.

Legal basis: Notice on Issues Related to 20 15 Directional Underwriting Issuance of Local Government Bonds Article 2 Directional Underwriting Issuance of Local Bonds shall be conducted through consultation between local financial departments and specific creditors in accordance with the principle of marketization.

For the bank loan part of the local government's stock debt, the local financial department will issue local bonds to replace it by directional underwriting after consultation with the creditors corresponding to the bank loan. For the debts formed by trust, securities, insurance and other institutions in the local government's stock debts, the local financial department can also issue local bonds for replacement by directional underwriting after consensus.