China's Local Gov'ts Drowning In $8-Trillion Debt

A measure of the off-the-books debt of Chinese local governments swelled by half between 2019 and 2022 amid shrinking revenue and heavy borrowing to pay for economy-supporting infrastructure projects, Iori Iwate reported for Nikkei Asia.

Photo Insert: A surge in borrowing, weak land sales and hyped but idle housing projects backed by local governments conspired to destroy a sanguine future for China's overrated development schemes.

Debt held by local government financing vehicles (LGFVs) totaled 59 trillion yuan ($8.25 trillion) at the end of last year, according to a recent report from the Rhodium Group.

A surge in borrowing, weak land sales and hyped but idle housing projects backed by local governments conspired to destroy a sanguine future for China's overrated development schemes.

As a result, more than half of Chinese cities are scrounging for cash, and the central government is obliged to restructure the debt, thus burying residents with higher taxes while white elephants litter their jurisdictions.

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