China's Finance Minister Lou Jiwei has said that his ministry is ready to expand the one trillion yuan debt swap for local governments, subject to approval by the National People's Congress.

According to reports in Chinese language media, the expanded 1 trillion yuan or 161 billion US Dollars debt swap quota, will depend on the issuance conditions of the current 1 trillion debt swap deal. Earlier this month, the finance ministry announced a policy which allows local governments to swap 1 trillion yuan of maturing, high-interest local debt for new municipal bonds.

The new policy aimed to cut interest costs, and reduce local debt risks. But the move came with a warning by the finance minister that the central government would not rescue local governments' default on local repayments.