People familiar with the matter revealed that the Chinese government has required local governments in 12 debt conditions to postpone or suspend some infrastructure projects funded by the state to control the risk of debt.
Reuters on Friday (January 19) quoted three people familiar with the matter.Less than half of the project construction.
The named provinces and cities include: Liaoning, Jilin, Guizhou, Yunnan, Tianjin, Chongqing, etc.The notice also requires that these provinces and cities should make every effort to reduce "debt risks to low -level".
Once the goal of reducing debt, the China National Development and Reform Commission will seek the approval of the State Council to adjust the debt policies of these provinces and cities to invest in new infrastructure.However, the notification does not specifically explain how to measure the degree of debt reduction.
Two people familiar with the matter said that the notice issued by the Chinese State Council also listed in detail the list of infrastructure projects that need to be suspended, including highways, airport reconstruction or expansion and urban railway projects.Some central governments have approved projects, such as affordable housing projects, are not within the scope of this suspension project.
The notice also requires the investment scale of the project to compress the investment rate of more than 50%of the local governments.
Unlike most major economies, Chinese government debt is mainly based on local debt. Local governments will financing through local government financing platforms (LGFV) as major basic projects.In 2022, the total scale of China's local bonds exceeded 9.2 trillion yuan (RMB, the same below, the same is S $ 17.33 trillion), accounting for 76%of the GDP (GDP).
In the past three years, multiple factors such as increasing epidemic expenditure, decreased investment returns, and decreased land income have increased China's local financial burden, and also exacerbated the market's concerns about the upgrading of local debt into a systematic financial risk.
Reuters reported last October that the State Council of the Chinese State Council has Limit 12 new debt high-risk areas issued new new issues.New debt and Malaysia projects , including 12 provincial and municipal autonomous regions including Liaoning, Jilin, Yunnan, Guizhou, Tianjin and Chongqing.They can only undertake a specific project approved by the central government, and the construction of railway stations and power plants is not allowed.
In order to slow the pressure of debt in recent months, the Beijing government continues Issuance Local Government Bond For the expired or upcoming debt to seek the exhibition period or use the old and old temporary solutions.According to data from the Ministry of Finance of China, in the first 11 months of last year, the size of government bonds issued by the local government of China totaling about 9.14 trillion yuan.
