China’s local government debt-for-bond swap program, with an initial size of CNY1 trillion this year, might attract a variety of investors without triggering a U.S.-type quantitative easing (QE). The Ministry of Finance has asked provincial authorities to convert trillions of yuan of expiring debt into bonds that carry lower yields and longer-term maturities. The move is to improve transparency of liabilities and ease short-term repayment pressures for local governments. Finance Minister Lou Jiwei told the South China Morning Post there was no need to get help from the People’s Bank of China (PBOC) on the debt replacement plan. The sales of the bonds would be market-oriented, avoiding quantitate easing (QE). As the PBOC wouldn’t buy the bonds on a large scale, the question arises who would be the potential buyers. Jurgen Conrad, the head of the Economic Unit at the Asian Development Bank (ADB) in China, told the Post the pool of potential investors would be large, including domestic commercial banks, other institutional investors, and possibly also foreign buyers. State-owned policy banks, which have heavily financed infrastructure projects, might be interested too, Conrad said. A Federal Reserve-type bond purchase by the PBOC was unnecessary, while the size of the bond offering was small, equivalent to only 1.5% of China’s gross domestic product (GDP), he said.