BEIJING- China will allow local government financing vehicles (LGFVs) in the southwestern province of Guizhou to delay debt payments and undergo debt restructuring, the cabinet said on Wednesday, part of a broader plan to spur growth in one of China's poorest regions.

China's local governments are struggling financially as tax and fee cuts by the central government and a downturn in the property market weigh on fiscal revenues. Governments in less-developed regions like Guizhou have been particularly hard-hit.

Analysts at S&P said in November that they expect fiscal balances for China's local and regional governments to widen this year, owing to increasing economic headwinds and more countercyclical fiscal support.

"For qualified outstanding hidden debt oligations, China will allow local financing platforms to negotiate with financial institutions to appropriately extend repayment and undergo debt restructuring to maintain cashflow," the State Council said in a document on its website.

In addition, the central government will increase the quota for local government debt issuance allocated to Guizhou.

Local government hidden debts, mainly LGFV debts including loans and bonds, reached 45.0 trillion yuan ($7.12 trillion) at the end of 2020 - equivalent to 44% of GDP and more than four times its end-2010 level, Nomura estimated last year.

China will also support state-owned companies in Guizhou to conduct strategic restructuring, as well as pushing for reforms in local energy and mining sectors, the State Council said.

The new document on Wednesday also outlined favourable policies to help Guizhou transition into a digital economy and develop its tourism industry.

($1 = 6.3182 Chinese yuan)

(Reporting by Stella Qiu, Samuel Shen and Andrew Galbraith; editing by Jason Neely and Louise Heavens) ((; 86-10-66271289;))