© Reuters. FILE PHOTO: A man rides a bicycle past a street at the Beijing’s Central Business District (CBD) during morning rush hour, in Beijing, China April 18, 2023. REUTERS/Tingshu Wang
WE
+16.54%
Add to/Remove from Watchlist
Add to Watchlist
Add Position
Position added successfully to:
Please name your holdings portfolio
Type:
BUY
SELL
Date:
Amount:
Price
Point Value:
Leverage:
1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000
Commission:
Create New Watchlist
Create
Create a new holdings portfolio
Add
Create
+ Add another position
Close
BEIJING (Reuters) – China’s fiscal status overall is sound and safe, but some local governments are facing high debt risks and large pressure of debt repayment, state media Xinhua news agency reported on Monday, citing a finance ministry official.
The comments came as investors and economists become more concerned about municipal debt risks following local government financing vehicle (LGFV) debt repayment stresses seen in provinces such as Guizhou and Yunnan. LGFVs are typically investment companies that raise money and build infrastructure projects on behalf of local governments.
“At present, local government debt is unevenly distributed, with some local governments seeing relatively high debt risks and large debt repayment pressure,” Xinhua said, citing an unnamed finance ministry official.
“We have urged relevant local governments to take the responsibility… and hold the bottom-line of preventing systemic risks,” the report said, adding that China has left enough room to deal with risks and challenges.
According to U.S. economics and policy research firm Rhodium Group, at least 102 Chinese cities faced difficulties in managing their debt-servicing costs last year, reining in China’s ability to use fiscal stimulus to spur the economy’s post-COVID recovery. The interest burdens of the northwestern city of Lanzhou and the southwestern city of Guilin outpaced their fiscal capacity last year, Rhodium said.
“Our fiscal revenue has not recovered to the 2019 level, but the fiscal expenditure increases year by year. (We) must keep tightening our belt,” Xinhua said, citing Jin Hannan, head of the finance bureau in Tongshan county, Xianning in China’s Hubei province.
Source: Investing.com
