"The level of financial resources is limited, and the promotion of debt work is extremely difficult, and it is impossible to be effectively resolved by relying on its own ability."

This paragraph is not the case of the shares of a company, but an article published by the Guizhou Provincial Government Think Tank in early April.The rare move of official self -exposure to the debt crisis has highlight that the risk of resolving debt has become an emergency, and it has also attracted attention to China's continued rising local debt.

The data released by the Ministry of Finance on April 26 shows that the first quarter of this year's 31 provinces, autonomous regions and municipalities issued a total of 2.11 trillion yuan (RMB, the same, the same, 407.1 billion yuan), which was about the same period last year.16 %, also hit a new high in five years.

At the same time, in the first quarter, the first quarter of its interests reached a total of 605.5 billion yuan in debt, and the scale of debt repayment was less than one -third of the new debt.Among 362.4 billion yuan, more than ninety -Chengdu was issued by issuing re -financing bonds to "borrow new bonds to repay old bonds".

Guizhou, which has difficulty repaying debt, repay the principal in the first quarter, and pay 8.8 billion yuan in interest. At the same time, it also adds 45.6 billion yuan in debt issuance.

Statistics show that Guizhou Province last year's liabilities were nearly 1.25 trillion yuan, and the total debt ranked 11th in the country. However, except for the province's GDP (GDP), the debt ratio was as high as 61.9 %, which has exceeded 60 %.The warning line is second only to Qinghai with a debt ratio of 84.3 %.In contrast, the three provinces and cities with the lowest debt ratio last year were Guangdong, Shanghai, and Jiangsu, which are more economically developed, all less than 20 %.

Chen Bo, dean of Wuhan Optics Valley Free Trade Research Institute, pointed out in an interview with Lianhe Morning Post that the central government's financial situation in the past two years is still healthy, and local governments have faced greater debt pressure.On the one hand, epidemic prevention expenditure has increased significantly. On the one hand, the economic downturn has led to a decrease in return on investment and compressing the local finance.

Chen Bo further analyzed that the risk of debt default in the economic and developed provinces is small because the government has debt issuance and buyers have investment interest.In contrast, although the total debt is less in developed areas like Guizhou, although the total debt is not as good as developed regions, the risk of breach of contract is higher due to poor debt repayment capacity.

The fiscal budget reports from all over China show that 22 of the 31 provinces and cities last year fiscal revenue decreased year -on -year. After deducting the policy -reduction factors of reserved tax refunds, six provinces also declined. Most provinces fiscThe growth rate of income slowly slowed down.The weak real estate market has led to another important source of local income -the land transfer income listed in the government fund budget has dropped sharply.Last year, at least 28 provincial government funds revenue decreased year -on -year.

After Guizhou officially public for help, one of China's largest non -performing asset management company's Cinda Asset Management Company announced that it will establish a 50 -person financial expert group to focusCooperate with Guizhou.

As the epidemic has weakened the impact of China's economy, Chen Bo is optimistic about local fiscal pressure to relieve this year.He also believes that the central government will not take a look at the credit bankruptcy of the provincial government. It may be rescued in several ways, such as subscribing to local debt through state -owned banks or investment institutions, and semi -market -oriented ways of blood transfusion.In addition, the central government can directly allocate major projects related to the development of people's livelihood, help local governments save funds to repay debts, and maintain local economic stability.

"However, for the behavior of non -debt issuance and investment, the central government has always been vigilant and will also require local governments and markets to share risks."

hidden debt risk

In addition to the explicit debt on the book, hidden debts borrowed by financing platforms such as urban investment companies are another major risk faced by local finances.When the Politburo of the Communist Party of China deployed economic work at the end of April, it listed the "strengthening local government debt management and strictly controlling new hidden debt" as one of the tasks to prevent and resolve risks in key areas.

Former China Minister of Finance, Lou Jiwei, pointed out at a forum in January this year that as of 2020, the market estimates that the scale of local government's hidden debt is 300 trillion to 5 trillion yuan.

Lou Jiwei said that although urban investment companies are not government departments, they often have "urban investment faith" and believe that the local government will not let the financing platform bankrupt.The local government also has a "rescue belief", and believes that the central government will not let local fiscal bankruptcy, and will eventually take a shot, which will cause the government's hidden debt to get bigger and bigger.He believes that the central government should adhere to the principles of resolutely not rescue of local hidden debt.

The current Treasury Secretary Liu Kun also emphasized in the media interview in January this year that regulating the management of local government financing platform companies is an important part of preventing local government debt risks.He said that the Ministry of Finance will further break the government's pocket expectations, promote the formation of a benign mechanism with clear government and corporate boundaries, clear responsibilities, and controlling risks, and promote sustainable fiscal development.

To attract investors to subscribe, local bond spreads are often higher than government bonds.However, Lu Xi, assistant professor of the School of Public Policy of the National University of Singapore, observed that in the past two years, the local debt interest rate has continued to decline under the economic downturn in the past two years.The demand is still strong.

Lu Xi believes that behind this is that the central bank supports the subscription of local bonds by leaving water to support state -owned commercial banks, maintaining the relatively stable and optimistic emotions of the overall bond market."The problem now is, to what extent such a debt -issuing model can drive other investors to buy? If the effect is very small, the debt issuance is very limited to the economic stimulus, but it may increase the financial burden."

Data of the Ministry of Finance shows that the top scale of debt issuance in the first quarter of this year is Shandong, Guangdong, Sichuan, and Jiangsu Province, with about 47.5 % of special bond investment towards traditional infrastructure projects such as transportation, municipal construction, and industrial park infrastructure.Infrastructure is still the main start of the stable growth of local governments.

Lu Xi pointed out that traffic infrastructure is often the strongest in the marginal effect of the first large -scale investment, and it has continued to weaken.When the high -speed rail coverage is very high, reinvestment infrastructure is not to drive investment with demand, but expects to use investment to create demand, which may be counterproductive.