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This study investigates how long-term demographic dynamics affect the sustainability of local government special-purpose bonds in China.

Long-term demographic dynamics and local government special-purpose bond repayment sustainability: evidence from birth rate shocks in Chinese provinces

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Randomized trial examines the impact of birth rate shocks on local government bond sustainability, suggesting key policy insights.

This study investigates how long-term demographic dynamics affect the sustainability of local government special-purpose bonds in China.
Analyzed panel data from 30 Chinese provinces (2015–2023)
Utilized bootstrap-based mediation analysis to explore indirect associations
Examined the role of population birth rates on LGSB solvency through tax revenue, land capacity, and urbanization.
Urbanization significantly impacts LGSB sustainability, with empirical support indicating strong correlation.
Tax revenue and real estate investment pathways show borderline evidence, suggesting weaker connections to bond sustainability.
Demographic factors are linked to structural conditions affecting LGSB repayment capacity.

Zhang et al. (2026) studied this question.

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