S&P Global Ratings warned that China’s local governments are likely to come under growing financial stress as they try to meet rapidly expanding pension obligations. The rating agency said rising benefit payments add to existing fiscal pressures and could limit authorities’ ability to support economic activity or sustain infrastructure spending. The caution follows a National Audit Office report that examined 4.1 trillion yuan ($576.9 billion) in basic pension assets across 25 provinces and found about 60.2 billion yuan had been diverted, including for debt repayment. The misuse underscores the strain on regional coffers, already hit by weaker tax receipts and a prolonged property downturn. Analysts say the combined impact of swelling pension costs, slowing revenue and restricted access to new borrowing raises the risk of service cutbacks or increased reliance on central-government support. Beijing has yet to outline new nationwide measures to bolster the pension system or fill local funding gaps.