Analysis: China can no longer 'extend and pretend' on municipal debt

Summary

Chinese leaders promise “basket of measures” to fix local debt
Latest Politburo stance suggests Beijing may be ready to step in
Extent of Beijing’s involvement closely watched by economists
Measures could involve state bank loans, special bonds

BEIJING, Aug 7 (Reuters) – China’s promised “basket of measures” to defuse local government debt risks is likely to include special bond issuance, debt swaps, loan rollovers, and something Beijing really loathes: dipping into the central budget.

Local governments are fundamental to China’s economy, with Beijing tasking provincial and city officials with meeting ambitious growth targets. But after years of over-investment in infrastructure, plummeting returns from land sales and soaring COVID …

Read the full article at: https://www.reuters.com/markets/asia/china-can-no-longer-extend-pretend-municipal-debt-2023-08-06/

Analysis: China can no longer 'extend and pretend' on municipal debt – Reuters

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