In China, state-led financialisation through local government financing platforms resulted in a surge in local government debt. To manage financial risk, the central state introduced local government bonds (LGBs) to replace the platforms as the main financing source for infrastructure investment. The issuance of LGBs is subject to a budgetary process. We argue that LGBs mark a turn to state de-financialisation, as the local state’s financial logic of maximising value extraction from the built environment is restricted by budgetary control. Through developing a database of LGB issuance in over 400 prefectural cities, this article reveals that local indebtedness determines the geographies of bond issuance, confirming the effect of the central state’s objective of restricting local government debt. The dynamics of state-led financialisation change from the inter-jurisdictional competition in infrastructure investment among local states through local government financing platforms to a hierarchical control of LGB issuance led by the central state using the budget. Our findings show that financial expansion may mean state de-financialisation and fiscal resources are not only used to promote state-led financialisation but also to enable state de-financialisation
