The Chinese government on Friday approved a $1.4 trillion plan to revive the economy, authorizing local governments to refinance crushing debts that have left some cities unable to pay their bills.

       The move caps a series of steps that China’s leaders started rolling out in September to stimulate growth. The effort took on greater urgency this week with the election of Donald J. Trump as president of the United States.

       Mr. Trump has promised to put additional tariffs as high as 60 percent on Chinese goods imported by the United States, a policy shift that could draw sharp retaliation by China and escalate already tense relations between the world’s two largest economies.

       China’s economy has struggled to regain momentum this year. The grinding collapse of the real estate market, where most Chinese households build their wealth, has depressed prices and left consumers reluctant to spend. Home prices have fallen about 10 percent a year for the past three years, and foreclosures are soaring.

       Advertisement

       SKIP ADVERTISEMENT

       At the same time, local governments have piled up unsustainable levels of debt. For years, they drove growth by borrowing enormous sums to pay for infrastructure projects. Then they took on even more of debt during the Covid-19 pandemic. China’s central government has relatively low levels of public debt because much of spending is largely funneled through cities and provinces.

       Image

       China’s economy has struggled to regain prepandemic momentum, with the real estate market slump. Credit...Qilai Shen for The New York Times

       China’s CSI 300 index

       Source: FactSet

       By The New York Times

       Subscribe to The Times to read as many articles as you like.