Recently, the remarks by Minister of Finance Lan Fuan on "increasing the intensity of counter-cyclical fiscal policy adjustments and promoting high-quality economic development," particularly the proposal to "consider a one-time increase in the debt limit on a large scale to replace local government's existing hidden debts, marking the most significant effort in recent years," have sparked heated discussions. So, how should we understand the term "one-time debt resolution" as mentioned by the Finance Minister?

In fact, this speech on debt resolution includes three closely interconnected parts: "One-time debt resolution," support for banks, and maintaining stability in the real estate market. Let's start with "One-time debt resolution." The concept of hidden debt was first proposed by the central government in a certain year. Subsequently, the "Ten-Year Debt Resolution Plan" was implemented from year to year. Now, in terms of time, the debt resolution plan is more than halfway complete. According to the new national documents (Document No. , Document No. ), by the end of month in year, all urban investment enterprises will exit the local financing platform list. The absolute condition for "exiting the platform" is: hidden debt is cleared to zero. That is to say, under the "Ten-Year Debt Resolution" cycle, the next years will enter the final stage of resolving hidden debt. At this point, when the Minister of Finance says "proposes a one-time resolution," it is equivalent to sounding the bugle for the final assault. The subtext is: the bottom number of hidden debts is clear, the pace of debt resolution is under control, and for the most difficult part, a one-time large-scale debt swap by the finance ministry can basically solve the problem. The "Ten-Year Debt Resolution Plan" will conclude smoothly.

Has the local debt issue been resolved so easily? Not quite. The fundamental approach to resolving local debt involves controlled and limited debt swaps. After the swap, the debt is merely deferred, not eliminated. The ultimate repayment of the debt still falls on the local government's fiscal resources and investors such as banks. Therefore, the key to resolving the local debt issue, besides first controlling and eliminating the risks of defaults and buying time, ultimately hinges on sufficient financial support. This issue, after the real estate market adjustment and the concentrated outbreak of local debt problems, once sparked widespread social discussion. Subsequently, an idea was proposed and practically recognized: resolving local debt with national debt. Compared to developed countries worldwide, China's national debt scale is relatively low, offering significant space for issuing national debt. This is what the Ministry of Finance has consistently emphasized: "The central government still has considerable borrowing and deficit-raising capacity." In contrast to this capacity, China has always been very cautious in its attitude towards issuing national debt. Faced with widespread local debt issues, national debt issuance support is feasible. At the same time, another market function of national debt has been proposed: national debt is an important coordinator for driving economic development. Effective national debt issuance can not only strongly support local debt resolution but also promote China's economic development and effectively adjust relevant economic elements. After the extensive discussion on national debt support for local debt resolution, we have seen two very important developments—first, the issuance of ultra-long-term national debt, constructing a reservoir for regulating China's money supply, which immediately caused a significant social impact; second, recently, the state introduced a policy of exchanging stocks for national debt, injecting the power of national debt into the stock market, thereby igniting the stock market.

According to the timeline of the "Ten-Year Debt Resolution" plan, the year will see the elimination of hidden debts. However, after clearing hidden debts and the withdrawal of urban investment platforms, a significant amount of commercial financial debt remains unresolved. Next, it is necessary to address debt through market-based methods, including debt restructuring, corporate restructuring and reform, and promoting corporate profitability. At this point, the pressure of local debt will fall on banks. Therefore, when examining the logic of the Ministry of Finance's statements, the first part discusses debt resolution, and the second part focuses on banks. The content involves raising funds through the issuance of special sovereign bonds to increase the Tier 1 capital of major banks, solidifying the foundation for debt resolution—as the Ministry of Finance mentioned, utilizing "market-oriented" and "legal" approaches to resolve debt, while also replenishing banks' core Tier 1 capital, refers to this very action.

So, what market opportunities will arise from the Ministry of Finance's step-by-step, measured approach to resolving local government debt, backed by government bonds as a tool for adjustment, and who will benefit more from it? Firstly, the Ministry of Finance's stance has directly fed back into the debt resolution sector of the stock market. The relevant debt resolution themes have attracted market attention, thus driving the market. However, in reality, the impact of government bonds on the stock market is comprehensive and not limited to the debt resolution theme. As previous policies have already facilitated the connection of funds between government bonds and the stock market, the Ministry of Finance has also clearly stated that if the results are good, it will continue to increase support for the stock market. Therefore, the expansion of the scale of government bonds is closely related to the stock market. In other words, the direct beneficiaries of resolving local government debt are the stock markets. Many people often discuss whether the fundamentals of the real economy support the stock market when talking about the stock market. In fact, this statement reverses the order of the issues. The future economic launch will start from the stock market—initiated by the capital market to start the real economy. The stock market leads, not the other way around. Resolving local government debt is precisely fueling the stock market. In the third part of the Ministry of Finance's speech regarding debt resolution, it mentioned stabilizing the real estate market. Because a large part of the local government debt problem originates from the real estate sector. Solving the local government debt problem is inseparable from resolving the real estate problem, combining debt resolution with real estate, and debt resolution with the well-being of the people. As a result, debt resolution directly benefits the real estate sector and is pregnant with a new round of real estate market trends. Due to the hard timeline for urban investment platforms to withdraw, the pace of urban investment being separated from the government is clearly visible. This creates opportunities for the next round of development for urban investment. Various new reorganizations and integrations will occur around urban investment. Urban investment has the advantage of local construction. Under the leadership of the government, new real estate opportunities will also arise with the future development of cities. This is what some observers refer to as the "return of the urban investment faith," because new opportunities for urban investment have arrived. Therefore, debt resolution itself is not just the negative numbers that many people see. Many people are frightened by some very large numbers, only seeing the huge pressure on local governments. The market opportunities generated by debt resolution are actually turning points for the Chinese economy. Many historical comebacks have occurred in such seemingly difficult situations.