Guizhou Province Seeks Beijing Help To Pay Off Huge Debt

One of China’s poorest and most indebted provinces has admitted defeat in trying to sort out its finances and is appealing to Beijing for help to avert default, Laura He reported for CNN.

Photo Insert: Guizhou, located in a mountainous region of southwest China, has hired a state-owned distressed debt fund, China Cinda Asset Management, to resolve its problems.

Guizhou, located in a mountainous region of southwest China, has hired a state-owned distressed debt fund, China Cinda Asset Management, to resolve its problems. Its total debt, including the “hidden debt” issued by the government’s financing arms, topped 25 trillion yuan ($3.6 trillion) by the end of 2021.

Cinda’s appointment, coming just days after the province of nearly 40 million people made an unusually public appeal to the central government for help, suggests Beijing may be starting to rescue debt-ridden regional governments to avoid potential defaults that could threaten the country’s financial and political stability.

The Beijing-based firm — one of four funds created by the Chinese government in 1999 to process the bad loans of state-owned banks — announced Saturday that it would send a group of 50 experts to the province to help it “prevent and defuse risks” and “bailout” the real estate industry.

China’s local governments are struggling with trillions of dollars of debt after three years of strict pandemic controls and a real estate crash drained their coffers. Some cities have already slashed medical benefits to seniors, sparking protests, and other vital services are at risk.

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