Local debt replacement refers to the replacement of short-term, high-interest debts such as financial products and bank loans of the original government financing platforms with long-term, low-interest bonds on the basis of the Ministry of Finance’s screening of existing debts. . The part of the existing debt that is direct government debt will be freed from short-term, high-interest debt and turned into long-term, low-cost direct government debt. Local debt swap is an innovative initiative of China’s financial sector.

Legal Basis

Article 551 of the "People's Republic of China and Civil Code"

The debtor transfers all or part of the debt to the third party If there are three persons, the creditor's consent must be obtained.

Article 552

If a third party agrees with the debtor to join the debt and notifies the creditor, or the third party expresses its willingness to join the debt to the creditor, the creditor fails to do so within a reasonable period of time. If it is explicitly refused, the creditor may request the third party to assume joint and several debts with the debtor within the scope of the debts it is willing to bear.

Article 553

If the debtor transfers the debt, the new debtor may assert the original debtor's defense against the creditor; if the original debtor has claims against the creditor, the new debtor shall not claim against the creditor Claim offset.