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China’s local government debt—what is the problem?

Louis Kuijs's picture

China’s massive stimulus spending has raised widespread concerns about local government finances. Local governments have ramped up infrastructure spending since late 2008, while they are also under pressure to spend more on health, education, and social security, for which they are in large part responsible. With monetary conditions likely to become tighter this year and land revenues possibly slowing down or even declining, local government finances may become strained.
At the heart of the concerns are local government investment platforms. These are state-owned-enterprise (SOE)-type entities set up to finance infrastructure construction and urban development—sometimes also called Urban Development and Construction Companies. Set up in part to circumvent rules prohibiting local governments from borrowing, their investment activities are mainly financed by land sale revenue and bank financing, often using as collateral land requisitioned from local residents.

Indonesia's $100 billion budget: Is debt an issue?

Wolfgang Fengler's picture

I have received many encouraging responses to my first blog. Thank you. This time, let's look at Indonesia's budget. Last year, Indonesia's budget reached the magical threshold of US$100 billion.

Underrated Indonesia poised to enter global stage

Wolfgang Fengler's picture

Indonesia is still underrated globally. Why does the world not notice? One reason is particularly poor performance in sports and higher education, two areas that give countries a lot of international exposure.

Is there a wave of bad debt on the horizon in Asia?

James Seward's picture

You may want to grab your surfboard to be prepared even though this wave may not yet be visible now.  There is little (public) focus on this question in Asia at the moment and I suspect that the reason is simple – over the past ten years we have witnessed a relatively long period of stability and rapid economic growth across Asia.  Such a situation can too easily breed complacency and high levels of risk-taking by banks,