This must be a matter of deep frustration for President Xi Jinping. In 2015, during his first term, he conducted a thorough audit and cleanup of hidden municipal debt. Less than a decade later, local government borrowings have once again reached dangerous levels.

How much debt have local government financing vehicles — or off-balance-sheet shell companies regional officials use to finance infrastructure projects — accrued? Their accounting is so murky even Xi may not know. The International Monetary Fund pegged LGFV debt to 57 trillion yuan ($7.8 trillion) as of 2022, or 48% of China’s gross domestic product. But that’s a conservative estimate. This figure excludes borrowings from tens of thousands of smaller LGFVs that do not have access to the bond market and thus are not required to disclose financial data.

QOSHE - China’s $7.8 Trillion Municipal Debt Crisis Began in 1994 - Shuli Ren
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China’s $7.8 Trillion Municipal Debt Crisis Began in 1994

1 1
01.11.2023

This must be a matter of deep frustration for President Xi Jinping. In 2015, during his first term, he conducted a thorough audit and cleanup of hidden municipal debt. Less than a decade later, local government........

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