China allowed local governments to issue bonds to improve their debt sustainability. Initially, the central government issued and repaid the bonds, but since 2015, local governments have taken on this responsibility themselves. This shift is seen as a suitable measure to prevent moral hazard and strengthen fiscal health. The transition from non-bond to bond debt has been smooth, with the issuance of substitution bonds completed in 2018. Future debt succession is expected to involve refinancing bonds. The total amount of local government bonds issued is being managed stably, with no significant increase in debt risk. However, the rise in off-budget dedicated bond issuance warrants attention, as it may not correspond to an increase in profitable projects. The current AAA credit ratings for local government bonds in China make it challenging to reflect regional risks in pricing, although bond interest rates are somewhat linked to regional debt levels. The local government bond market in China is characterized by low trading volume and closed transactions dominated by state-owned banks, indicating limited prospects for market activation in the near future.