Can China Contain Its $23 Trillion Local Debt Problem?
Hegang represents just the tip of the iceberg of a local government debt problem that’s making investors increasingly nervous and that threatens to be a drag on the world’s second-largest economy for years to come.
Hegang. a city with nearly a million people near the Russian border, faced years of dwindling revenue from a coal industry in decline
He can now afford to own three properties in the city, including his current home, a 50-square-meter third-floor walk-up apartment for 40,000 yuan - 60.000 SEK — about 1% of the cost of a similarly sized place in Shanghai - 6 mkr .
The bigger worry is that local governments will have to make painful spending cuts or divert money away from growth-boosting projects to continue repaying their debt. At stake for Xi is his ambition of doubling income levels by 2035 while reducing the gap between rich and poor, which is key for social stability as he seeks to rule the Communist Party for potentially the next decade or more.
Bloomberg 22 maj 2023
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