China's Solution to $3 Trillion Debt Is to Deal with It Later

China’s government has a creative solution to address repayment concerns hanging over more than $3 trillion in regional debt. It will deal with it later.

The Finance Ministry issued a 1 trillion yuan ($160 billion) quota for local governments to convert maturing high-cost debt into lower-yielding municipal notes to be repaid at a future date, according to a March 8 statement. Questions left unanswered include whether investors will be forced into the swap, how much transparency there will be over assets involved and whether the liabilities will strain the nation’s finances.