China’s Push to Clear Hidden Debt Likely to Benefit Weak Regions

China is getting serious about clearing the off-balance sheet debt of local governments, and weaker provinces are likely to benefit the most from the process.

Zhang Wei, an analyst with Founder Securities Co., estimates that southwestern and northern provinces like Yunnan and Tianjin will likely be prioritized if China adopts a plan to reduce so-called hidden debt through bond swaps. Bloomberg News reported last month that officials are considering such a plan to help tackle a problem that’s become a major risk to economic growth and financial stability.