China Faces Rising Local Debt and Weak Land Revenues

China’s local government debt keeps rising as weak real estate cuts land revenues, forcing more bond issuance and reliance on subsidies.
China’s local government debt keeps rising as weak real estate cuts land revenues, forcing more bond issuance and reliance on subsidies. (Photo: FRED DUFOUR / AFP)

China’s local government debt has reached unprecedented levels as a weak real estate market slashes land-sale revenues that cities once depended on.

According to a report that cited Nikkei Asia, total debt raised directly by local governments and via their financing vehicles (LGFVs) now stands at around 134 trillion yuan, equal to roughly $19 trillion when converted at the prevailing exchange rate.

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by Edwin Shri Bimo

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