China starts a new round of local governments hidden debt foundation

(Beijing Bloomberg) At the time of China's economic recovery power, the Ministry of Finance of China has reportedly launched a new round of national governments hidden debt.

As the market is more concerned about local fiscal pressure and government financing platform default risks, this may be the latest signs of further measures to take measures to respond to major financial risks in the future.

A person familiar with the matter said that the work starting from May this time was led by the Ministry of Finance of the Chinese Ministry of Finance in order to master the comprehensive and authentic situation of hidden debts of local governments. It is unclear whether there are follow -up measures.

Many administrative units in China use the "local government financing platform" company borrowing, and payment cannot be paid infrastructure and other service costs that can be paid from the official budget.These companies are controlled by local governments, but they do not formally belong to government departments, and their debt will not appear in the official financial statements.

At present, many local governments' financing platforms are difficult to make profit, and they cannot even raise enough funds to repay loans.

A survey shows that 53 economists, fund managers, and strategists interviewed generally believe that local government financing platforms have the highest risk.

The new round of the hidden debt of the local government this time is when the power of China's economic recovery is reduced.At present, there are no signs of rebound in the real estate industry. The global demand of Chinese goods and domestic consumption are weakening. Local governments have been limited by large debt and revenue through infrastructure expenditure to stimulate economic growth.

Data from the Ministry of Finance of China show that as of the end of April, the total debt of governments at all levels in China reached 37 trillion yuan (RMB, the same below, about 7 trillion yuan).There is no hidden debt scale and official data of the debt party.

The International Monetary Fund Organization estimated that as of the end of 2022, the total hidden debt of the Chinese local government financing platform was 66 trillion yuan, an increase of 40 trillion yuan in 2019. It shows that local governments are supporting the local economy.During the epidemic period, non -disclosure borrowings and expenditures were increased.