[The Epoch Times, December 02, 2023]After three years of implementing the epidemic containment policy, the scale of local government debt in China has increased rapidly. Recently released official data showed that local government debt balance exceeded the 40 trillion yuan mark for the first time.
Recently, the Ministry of Finance of the Communist Party of China disclosed the issuance and debt balance of local government bonds in October 2023. As of the end of October 2023, the national local government debt balance was 40,101.1 billion yuan (RMB, the same below).
According to data from the Ministry of Finance of the Communist Party of China, the national local government debt balance exceeded 10 trillion yuan for the first time in 2013; in 2019, this number exceeded 20 trillion yuan; in 2021, it exceeded 30 trillion yuan; this year, it exceeded 40 trillion yuan.
According to a report by China Business News, in recent years, in order to hedge against the downward pressure on China’s economy, active fiscal policies have been significantly intensified. One of the manifestations is the increase in local debt, which has also caused the scale of local debt to rise rapidly.
Beginning in October this year, Chinese local governments intensively issued over 1 trillion yuan in special refinancing bonds to replace implicit debts that the government has the responsibility to repay. This is also an important factor that pushed the local government debt balance to exceed 40 trillion yuan in the first 10 months of this year.
In addition, due to the weak growth of fiscal revenue in recent years, especially under the downturn of the property market, local land transfer revenue has fallen sharply, and the superimposed debt scale has grown rapidly, making the local debt ratio (debt balance/comprehensive financial resources), one of the indicators of local debt risk, significantly At the end of last year, the local debt ratio was already near the 120% warning line set by the Ministry of Finance.
According to estimates by the International Monetary Fund (IMF) in February this year, the total debt of the CCP’s local financing platforms has skyrocketed, from 57 trillion last year to 66 trillion yuan, about 9.5 trillion U.S. dollars, accounting for at least half of China’s total debt .
In recent years, the Chinese Communist Party’s crackdown on real estate developers has caused a real estate crisis sweeping the country, which has also strained local government fiscal revenues. During the three-year epidemic, due to the extreme lockdown policies implemented by the authorities, China’s real economy was severely damaged, with a large number of companies closing down and people losing their jobs.
The CCP has repeatedly asked governments at all levels to “tighten their belts” and be prepared to “live a tight life” for a long time. Recently, many places in China have begun large-scale liquidation of non-staff personnel in government agencies and institutions. Some Chinese scholars believe that after clearing out non-staff personnel, it is possible to further streamline the staff to reduce the financial burden.
Editor in charge: Li Bing
2023-12-02 01:43:58
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