In Depth: Why China’s Efforts to Resolve Hidden Government Debt Could Fall Short - Caixin Global
China’s central government has rolled out a new round of measures since the second half of last year to help local governments swap or restructure their off-the-books borrowing in a bid to control debt risk. However, the sheer scale of the country’s local government hidden debt — up to more than 70 trillion yuan ($9.8 trillion) according to some estimates, more than twice Germany’s GDP — means that the measures at best are far inadequate and will provide only temporary relief to what experts say is a looming liquidity crisis for regional authorities. At worst, it could further inflame the problem, promoting more off-the-books borrowing and increasing risk to economic and financial stability in the world’s second-largest economy, whose wobbly post-pandemic recovery has investors spooked, dragging the benchmark CSI 300 Index down 11% last year. Local government financing vehicles (LGFVs), state-owned companies set up to borrow on behalf of local authorities, are responsible for the heavi
00:00 00:00/00:00 您的浏览器不支持 audio 标签。 Listen to this article 1x Debt restructuring or swaps for LGFVs, either through banks or special refinancing bonds, will only provide temporary relief against an imminent liquidity crisis, scholars and analysts say. China’s central government has rolled out a new round of measures since the second half of last year to help local governments swap or restructure their off-the-books borrowing in a bid to control debt risk. However, the sheer scale of the country’s local government hidden debt — up to more than 70 trillion yuan ($9.8 trillion)…
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