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Huge Debts Limiting Services in Some Chinese Cities – CNN

Local government bodies accumulated an estimated $18 trillion of debt last year, according to CNN, which said the problem is so bad some cities have cut basic services and are at risk of default

Chinese police have arrested 234 people over a major banking scandal in Henan province, a local security bureau said on Tuesday.
Financial regulators in Henan had to deal with a financial crisis in mid-2022 that affected millions of customers. This shot from July 2022 shows people at a big protest in Zhengzhou over the freezing of their deposits by rural banks. File video screengrab: Reuters.


After three years of strict pandemic controls and a prolonged real estate crisis, local government bodies in China accumulated an estimated 123 trillion yuan ($18 trillion) of debt last year, according to a report by CNN, which said the problem is so bad “that some cities are now unable to provide basic services” and are at risk of default.

Analysts said this figure includes $10 trillion of “hidden debt” owed by local government financing platforms backed by cities or provinces, which were forced to slash wages and cut transport services or fuel subsidies in the middle of a harsh winter, the report said. But with local governments having “exhausted their budgets” after spending huge sums enforcing Covid lockdowns, mass testing and manning quarantine centres, it is reportedly not yet known if Beijing will bail them out, which led to a warning by Rhodium Group last week of a “significant risk of financial contagion” if small city and rural banks default because of their close ties to local governments.

Read the full report: CNN.





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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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