China Economics Seminar: The Real Risk In China’s Local Government Debt. As I discussed in my previous post, when looking at the high level of debt compiled by China’s local governments, it’s easy to imagine that the country is on the verge of a United States-style municipal meltdown, with towns and counties going bust.
But this is wrong, and more importantly it misses the real risk embedded in China’s soaring local-government debt levels. State-owned assets, land reserves, central government guarantees, and domestic financing all offer China advantages over some other countries in dealing with local government debts. But they won’t solve the fundamental problem. As long as the debt-financed investments are not economically viable, there will be an unsustainable increase in debt and if this continues forever, a debt crisis will take place. Historically, many countries that have experienced debt crises also had a lot of state assets, like South Korea and Russia.
Urbanization and Migration. Institutions and Agricultural Growth. China's Banking system/ financial sector. Public Finance, Money & Macroeconomic Stability in China. Foreign trade and economic development in China. China could reform its state businesses by stealth. China faces test over plans to cut industrial capacity. SOE reform and performance... The structural determinants of Chinese growth. A "Chinese" model? How did China boom? To sort... Research reports...