Caixin
Mar 11, 2018 07:31 PM
FINANCE

China Battles Hidden Local Government Debt

Chinese Finance Minister Xiao Jie talks about the country's budget plan for 2018 during a press conference in Beijing on March 7, 2018. Photo: AFP
Chinese Finance Minister Xiao Jie talks about the country's budget plan for 2018 during a press conference in Beijing on March 7, 2018. Photo: AFP

Over the past year, China’s central government has issued a series of documents tightening oversight of local government debt, in particular closing loopholes in financing that could lead to risky borrowing.

In the years since the 2008 global financial crisis, the country’s local governments have relied on inventive financing methods to overcome borrowing restrictions and fund infrastructure projects, resulting in ballooning debt and a vicious circle of taking out new loans to pay off existing debt.

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