In China’s heavily indebted cities, “fiscal winter” is manifesting through a peculiar ritual: businessmen crowding government offices in a year-end rush to claim overdue contract payments. In private conversations, some bitterly recounted waiting for hours in line to deliver a short, rehearsed plea for payments – only to be told that the official they sought was unavailable. For the well-connected lot who were granted an audience, the meeting often ended quickly: a shrug, an apology, and a resigned admission from the official that his coffers were empty.

The fiscal strain weighing on China’s local governments has been long in the making. Years of debt-fueled infrastructure expansion, lax oversight of off-balance-sheet borrowing, and heavy spending during pandemic years have left many localities dangerously leveraged. The collapse in land-sale revenue and slumping tax receipts have further battered local finances. Adding to the stress, Beijing has demanded that local governments rein in their liabilities, lately by setting up a new department under the Finance Ministry to oversee debt repayment.

As local officials scour every corner for cash, businesses are feeling the brunt. For officials, delaying........

© The Diplomat