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China Debt: How China’s ‘hidden debt’ of local governments is threatening the national economy hot news

The construction site of tower cranes at Suzhou South Station of Shanghai-Suzhou-Huzhou High-speed Railway is seen in Suzhou, Jiangsu Province, China, August 19, 2023.


More than 80% of local government financing vehicles do not have enough operating cash to cover interest payments on their debt, says UBS estimates. These entities are state-owned companies set up to finance infrastructure projects including highways and bridges.

Cheng Siwei, Liu Ran, Ding Feng and Denise Jia China’s local government financing arms — and the real estate industry that supports them — have long been viewed as two important drivers for the nation’s economy. Now, after years of rapid growth, the property sector has hit the skids, triggering a liquidity crisis for municipal and provincial borrowers that poses risks to the country’s financial system. More than 80% of local government

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