Local governments in China went 4 trillion yuan ($548 billion) into the red during the three-year pandemic, and the central government needs to issue special bonds to help them pay off debts owed to businesses, according to a well-known Chinese economist.

Accounts payable to businesses by local governments have mushroomed, hurting the ability of enterprises to invest, said Bai Chongen, dean of the School of Economics and Management at Beijing's prestigious Tsinghua University, at a fiscal policy forum Thursday in Beijing.