Major investment projects are being mothballed all over China as the government attempts to rein in the country’s rising debt levels, with poorer inland provinces bearing the brunt of the crackdown, Bloomberg reports.
In Lanzhou, capital of one of China’s poorest provinces, Gansu, Bloomberg found that a number of large infrastructure projects had been shut down, including a half-finished tram line, a network of tunnels for underground utility lines, and more than 200 other public-private partnership-financed initiatives. In total, half of Gansu’s PPP projects may have been halted.
“As financial regulation gets stricter and credit supplies tighten, it will be more and more difficult for local governments to borrow for infrastructure and industrial park development, or to borrow for repaying old debts,” said Qian Wan, a Bloomberg economist. “Deleveraging is always painful, but will be more painful for inland provinces where growth is not as robust.”
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