China has approved a 10 trillion yuan ($1.4 trillion) plan to help its struggling economy by allowing local governments to refinance debt.

The plan includes borrowing up to 6 trillion yuan ($838 billion) over three years to replace “hidden debt” from risky local government financing platforms.

Additionally, local governments will receive a 4 trillion yuan ($558 billion) quota in special bonds over five years.

Despite these measures, economists say the package, which amounts to about 0.5% of GDP, is unlikely to significantly boost economic growth, CNN has reported.

China’s local governments face severe debt challenges, worsened by pandemic restrictions and a real estate crisis.

Written by B.C. Begley