Report: debt problems on local levels
The article below from the South China Morning Post covers some of the issues regarding local debt levels which are slowly percolating up to be seen. While I don’t want to be an alarmist, and while the article focuses mostly on the busting of the DongGuan boom town, it has some gems worth noting like:
“It is a dramatic turn of fortune for Dongguan – one of the richest cities in China – and could foreshadow a wider fiscal crisis as the country’s economy cools.
Local government debt hit 10.7 trillion yuan ( HK$ 13.16 trillion) nationwide at the end of 2010, equivalent to about 27 per cent of gross domestic product. Credit rating service Moody’s estimates the actual figure could be about 14.2 trillion yuan.
Bai Jingming, a senior researcher at the Ministry of Finance, estimated in 2009 the total debt of village authorities could total 10 per cent of the country’s GDP, but there is no official data.
Bai said many village chiefs he interviewed had no idea how much debt they had. Yet their failings could bring serious political and financial instability at higher level government right down to the grass roots.” (emphasis mine)
