▲China’s local debt problem is serious. According to a report tonight by China’s financial media “Caixin”, Beijing intends to use 1.5 trillion yuan in debt financing to solve local debt. (Picture/return to South China Morning Post)
[NOWnews今日新聞] China’s large real estate developers have suffered a series of financial crises, and Evergrande Group, Country Garden, etc. have shown signs of collapse. Beijing’s financial supervisory authority also held an emergency meeting this weekend and announced that it will “optimize real estate lending” policies. At the same time, the Chinese financial media “Caixin” reported tonight and “Bloomberg” exclusively reported this month that the Beijing authorities are ready to use the RMB 1.5 trillion debt financing quota, showing their determination to deal with local debt. question.
China’s three major financial regulatory agencies held a meeting on the weekend and jointly announced that they will rectify and resolve debt risk issues in key areas, including the People’s Bank of China, the State Administration of Financial Supervision, and the China Securities Regulatory Commission. Enterprises, green development, technological innovation, manufacturing and other key areas, actively promote the transformation of “villages in the city”, the construction of public infrastructure for “both emergency and public use”, and adjust and optimize real estate credit policies.”
According to an evening report by Caixin, the Beijing authorities intend to launch a financing line of about 1.5 trillion yuan, which will allow local governments to use lower interest rates and more relaxed terms to solve the current excessive debt problem. These “city investment” or so-called The local debt accumulated by LGFVs is seen as a gray rhino threatening the Chinese economy.
“Bloomberg” mentioned that the high-risk areas supported by the central plan include 12 local governments including Tianjin, Guizhou, Hunan, Jilin, and Anhui. Special entities such as “special purpose vehicles” (SPV) will be established to issue bonds by arranging the issuance of new bonds to finance existing bonds. However, according to the International Monetary Fund (IMF), the scale of local debt accumulated by Chinese local governments may be as high as RMB 66 trillion, Beijing’s 1.5 trillion yuan financing line may be just a drop in the bucket.
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2023-08-21 01:41:15
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