On a certain date, an event occurred that sparked widespread social attention and discussion. This event was the announcement by Shaoxing City's Urban Investment Company that it would withdraw from the local financing platform list.

Why withdraw from the platform? According to relevant national policy documents (such as numbered documents), for indebted urban investment companies, a list-based management approach is adopted. The management process involves local governments overseeing the urban investment companies on the list, assisting them in completing debt resolution tasks, and after confirming their independence, promoting, reviewing, and approving their withdrawal from the local financing platform list. This is what is known as withdrawing from the platform. Theoretically, when all urban investment companies have exited the platform and the management list disappears, it signifies the resolution of urban investment debt issues. However, there are some ambiguities in this process, such as: under what circumstances can an urban investment company meet the criteria for withdrawing from the platform? Can exiting the platform under such circumstances achieve the goal of resolving urban investment debt? What methods are used to achieve the goal of resolving urban investment debt? What is the process?

Shaoxing City's Urban Investment Company exits the platform, just answering these questions. This Urban Investment Company, considered to be the "first batch to secure the consent of two-thirds of financial creditors" after the country's new relevant documents (No. Document, No. Document) explicitly stated that by the end of the month, all Urban Investment enterprises will exit the financing list policy, has a demonstration significance. This demonstration is very clear.

The governance of urban investment bonds involves two main aspects: debt reduction and platform withdrawal. Platform withdrawal is a combination of both. So, what conditions must a city investment company meet to withdraw from the platform? The withdrawal of a city investment company in Shaoxing reflects three conditions: First, the hidden debt has been cleared (operational financial debts may still be outstanding); Second, the government financing function has been stripped (no longer bearing the government financing function) and market-oriented transformation has been completed; Third, the consent of two-thirds of the financial creditors has been obtained. These three conditions for the withdrawal of city investment companies are concise but rich in meaning. Firstly, all city investment companies exit with financial debts, which means that to withdraw from the local financing platform, it is only necessary to clear hidden debts and no longer bear the government financing function, thus meeting the conditions for withdrawal. According to the Enterprise Early Warning System, the outstanding bonds of the city investment companies in Shaoxing are as follows: Shaoxing Shangyu Economic Development Zone Investment Development Group Co., Ltd.: . billion yuan; Shaoxing High-tech Industrial Development Zone Investment Development Group Co., Ltd.: . billion yuan; Shaoxing Keqiao Urban Construction Investment Development Group Co., Ltd.: . billion yuan; Shaoxing Paojiang Economic and Technological Development Zone Investment Development Group Co., Ltd.: . billion yuan. According to Wind data, the interest-bearing debts of the above city investment companies are: . billion yuan, . billion yuan, . billion yuan, and . billion yuan respectively.

Second, the withdrawal from the platform requires the consent of two-thirds of financial creditors, and the method of proof is adopted if financial creditors disagree (if they disagree, they need to provide specific details or clues regarding implicit local government debt, government financing functions, etc.), with the judgment power resting with local governments. This means that the interpretation and control over the withdrawal from the platform are more clearly in the hands of local governments, which is more conducive to local governments controlling the pace of withdrawal. Financial creditors are relatively passive, and the pace and methods of their debt resolution will follow the overall work pace of local governments.

The final exit deadline at the end of the month was set according to the completion of the Yearly Plan for Resolving Local Government Financing Vehicle (LGFV) Debt (Year), which is one year earlier than the 10-year period in 2023. With the completion of the phased exits from platforms in the coming years, the following results will be generated: 1. The nationwide elimination of hidden debt within five years; 2. Effective control of debt scale and significant reduction in risks; 3. Completion of the separation between local governments and LGFVs, shifting the focus from nationwide hidden debt to operational financial debt. The resolution of these debts will primarily employ market-oriented means. In other words, when LGFVs exit platforms, the nature of their relationship with local governments and their debt repayment methods will change. Before exiting, the methods for resolving debt in local financing platforms mainly involved fiscal measures and financial instruments such as borrowing to repay old debts. After exiting, the primary approach will be market-oriented means supported by local governments, i.e., under financial instrument support, relying on the transformation and performance improvement of LGFVs. Therefore, when Shaoxing City's 15 LGFVs exited platforms, some analyses considered it a market preemptive move. That is, LGFVs in economically developed regions (provinces not prioritizing local debt risk prevention) may gain better market opportunities and more funding cooperation, obtaining new opportunities under policy support after breaking free from regulatory constraints. For these LGFVs, since the timetable is already set, an earlier exit is more advantageous than a later one. Following Shaoxing's enterprises, LGFVs in Jiangsu, Fujian, Hubei, and other regions also exited platforms. It can be foreseen that in the next five years, the exit from platforms and operational transformation of LGFVs will unfold at an accelerated pace.