The debt problem for all but one Chinese province is worsening as local authorities continue to rely on borrowings to finance big-ticket spending programs, according to a joint review of local government finances, reported the South China Morning Post.
The review revealed that with the exception of the hinterland province of Shaanxi, debt ratio, measured as outstanding debt to local GDP, rose in 30 of 31 mainland provinces as of the end of June 2020. The assessment was released in the Local Government Bond Blue Book 2021, jointly published by the National Debt Association of China.
In all, 23 of the provincial areas had a fiscal balance ratio – a measure of debt repayment ability – below 50%. The results mean that most provinces are relying on transfer payments from Beijing or new debt to maintain fiscal balance.
Chinese regional and local governments sold RMB 5.7 trillion ($886 billion) worth of bonds in the first nine months of 2020, nearly 36% higher than the same period last year, Moody’s Investors Service said in a recent report.
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