A Chinese province has told Beijing it needs help dealing with its debt problem, a sign of the strain caused by a collapse in land sales.
(Bloomberg) — A Chinese province has told Beijing it needs help dealing with its debt problem, a sign of the strain caused by a collapse in land sales.
An official think tank that carries out research for Guizhou said in a report this week that the debt problems confronting the government of the southwestern province urgently needed attention, but solutions were “exceptionally difficult to advance due to the limited financial resources.”
The think tank arrived at the conclusion after conducting research in four cities in Guizhou. It said it would seek “actionable” advice from the Development Research Center under the State Council, China’s cabinet.
The report was published on Tuesday and removed from organization’s website, according to the South China Morning Post. Its contents have been reported by domestic media outlets and were circulating on social media.
The think tank in Guizhou didn’t immediately respond to a request for comment on Thursday.
Read More: China’s $23 Trillion in Local Debt Spurs Calls for Property Tax
Earlier this month, Goldman Sachs Group Inc. estimated the debt racked up by China’s provincial governments at $23 trillion — 126% of gross domestic product — if their off-budget borrowing is included. Curbing local debt risks was highlighted by President Xi Jinping as a key challenge officials must tackle this year.
Bloomberg News reported in February that a majority of regional governments — at least 17 out of 31 — were facing a serious funding squeeze. At that time, outstanding borrowing exceeded 120% of income in 2022, according to calculations based on available official data. That’s the threshold set by the Ministry of Finance to indicate disproportionately high debt risks.
Guizhou ranked 22 out of China’s 31 provinces and regions in terms of GDP last year, according to data compiled by state media. Its economy grew by just 1.2% on-year as the central government mandated that strict rules, such as snap lockdowns, be used to curb virus outbreaks.
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